Principles of Quantitative Development

1.2 QUANTS AND QUANTITATIVE DEVELOPERS

The term ‘quant’ is short for quantitative analyst. They are mathematicians who develop pricing models and keep abreast with the cutting edge research on stochastic calculus and quantitative finance. They transform the academic knowledge they assimilate into programs that can generate revenue and profit. Quants usually have an advanced degree in mathematics, physics or other quantitative fields. Ideally, quants have a sound knowledge of markets, business and products, as well as computer science.

The input to quants’ work is research and the academia. Their outputs are pricing models, often delivered as programs or functions in a library, aptly called the quant library. They may also deliver standalone pricing programs, usually as spreadsheets and add-ins.

Quantitative developers are computing professionals who make the output from the quants widely usable, often through the in-house trading platform. Their functional duties fall in between the quant output and the programs used at trading desks. Ideally, quantitative developers would have the same skill set as the quants (mathematical aptitude, product/business knowledge and computer science), but with less emphasis on mathematics and much more focus on computing and software engineering. How separated quants and quantitative developers are in terms of job functions and organizational hierarchies depends on the human resourcing strategies of the bank.

In our discussions in this book, we will ...