If you wanted to prove your mettle as an entry-level banker or trader it used to be the case that you had to know all about financial modelling in Excel. Not any more. These days it's all about Python, especially on the trading floor.
"Python already replaced Excel," said Matthew Hampson, deputy chief digital officer at Nomura, speaking at last Friday's Quant Conference in London. "You can already walk across the trading floor and see people writing Python code...it will become much more common in the next three to four years."
As Python becomes more prolific, Hampson said banks are able to innovate more quickly. The industry's reputation for fustiness is undeserved, Hampson added: "The concept of rapid innovation has always existed in financial services, but it was done using the Excel spreadsheet. We now have a new vehicle for doing that - Python."
As we reported previously, Hampson runs Nomura's new and growing e-trading strategy team, which was formed in May 2019. The team is tasked with increasing Nomura's fixed income trading revenues by 15% through the integration of artificial intelligence into the bank's systematic market making platform.
Hampson's comments come amid suggestions that Excel is in danger of dying out as sheets can be imported into Python where the computation is much quicker.
"I can run an Excel model with a several hundred interlocking formulas and a data table that has 50,000 rows and 100 columns and it takes 15 min to update," said one contributor to Wall Street Oasis last month. "Or, I can run a Python based model with thousands of interlocking corelation points and an underlying data structure that has 10,000,000 rows and 1,000 data attributes. Not to mention I can write scripts to infer missing data points. All of this can be done in about a second."
As Python takes hold, Hampson said the profile of people working on trading floors is changing. "The trading floor of the future will still have humans, but those humans will be different to the people you have today." Future traders will have hybrid skills covering finance, quantitative knowledge and the ability to automate processes and extract data, said Hampson. Today's top traders already have, "much more universal skillsets - they understand data, they understand finance, they understand how to code. That brings an agility that you didn't see until about five years ago."
Bloomberg reported last week that JPMorgan is arming members of Hans Buehler's 180-strong 'Analytics, Automation & Optimization' team with trading licenses as the quants break into trading. Hampson would approve: he concluded that the future is all about innovation and "breaking down the boundaries" between departments in large scale banks. Python is facilitating that.
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