Goldman Sachs automated trading replaces 600 traders with 200 engineers • Hacker News Board

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#141

Post by dx034 » Wed, Feb 08, 2017, 10:42 AM UTC

SilasX wrote: post #76

chollida1 wrote: post #3

....where the time frame involved is 17 years from 2000 until now. It's also weird that they don't mention the about to be dismantled Dodd-Frank Act (Volker Rule) that forced most sell side firms out of prop trading. I guess the headline, "computers replace humans for the most mundane and rules based tasks" doesn't grab headlines as much:) One other interesting tidbit > Some 9,000 people, about one-third of Goldman’s…

>>Some 9,000 people, about one-third of Goldman’s staff, are computer engineers. Is that right, or is that just a confused journalist? Computer engineers? As in, hardware design so they can shave off nanoseconds here and there? Or do they just mean programmers of any kind here?

Probably right, just poorly worded. It's not just engineers, it's all staff in tech. Most of them will have a CS degree (or similar). Nearly none of them will develop trading algorithms. It's mostly about maintaining systems, fixing problems, updating regulatory changes, integrating third party data, etc.

Having a third of headcount in tech is not unusual for a bank nowadays.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#142

Post by dx034 » Wed, Feb 08, 2017, 10:44 AM UTC

anigbrowl wrote: post #82

I bet almost none of those 200 engineers negotiated half as good a deal for themselves as any of the 600 traders.

Traders who just forwarded phone orders didn't make that much. The bank only gets the commission, there's not much the trader can do to increase profits. The huge bonuses are/were in prop trading, not in executing client trades.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#143

Post by dx034 » Wed, Feb 08, 2017, 10:46 AM UTC

grondilu wrote: post #52

What about other instruments? I used to work as an IT in a small investment bank, and the traders there were not doing any equity trading. They were dealing with bonds, swaps and stuff, and they were mostly doing arbitrage, IIRC. Also there was one guy on forex, but I vaguely remember that he was not supposed to speculate, rather he was supposed to trade whatever was necessary for the other guys to work. Is the equit…

> Is the equity market really that significant that we seem to only talk about it?

No, but most people only really understand equity markets. Few people know what it means to trade a swap or even bonds. But as most people have some experience with equities, it's easier to write about that. You won't find much automation in other areas, OTC trading can't be easily replaced by machines.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#144

Post by dx034 » Wed, Feb 08, 2017, 10:49 AM UTC

ionwake wrote: post #89

freddyc wrote: post #87

Want to know how I know AI is over-hyped? All of the VCs who were bullish on Bitcoin a few years back are now "thought leaders" on AI.

You sound wrong. Reread your comment and look at the price of bitcoin. Perhaps your inference is upside down.

The price is high, but bitcoin is still not a reliable currency that could present an alternative to established currencies. It seems to be mainly used for speculation and illegal activities.

There are probably not more people using it to pay for real-world goods than 2-3 years ago. The bullish view was that bitcoin would be popular with the public at some point. That hasn't happened yet.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#145

Post by dx034 » Wed, Feb 08, 2017, 10:51 AM UTC

lovich wrote: post #50

The article talks about the number of traders they replaced with engineers. Assuming that other investment banks are on the same trend, where are these traders going to get new jobs? Are they just retiring because they made enough money while trading?

That was done over a decade or so. Many people will have retired, some continued working in another function, some just went somewhere else. There are still many traders out there, the market is not that much smaller than 10 years ago.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#146

Post by dx034 » Wed, Feb 08, 2017, 10:54 AM UTC

blazespin wrote: post #20

fun fact: Advanced AI techniques work in very high dimensional spaces in such a way that it's impossible to clearly understand why a program reaches a conclusion that it does. Market trading is about allocating capital that decides how labor itself is allocated. So, increasingly, we have computers that are telling people what to work on and we don't know why they are making those decisions. We could remove the comput…

Those engineers are probably not working on AI. The traders were receiving phone orders from clients and executed them. Now there's a platform where clients put in trades which get executed. The engineers develop the platform and enable the remaining traders to trade orders efficiently.

It's probably at least 30% front-end web developers, many testers, some back-end developers. Execution only trading engines aren't that hard to develop.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#147

Post by fauigerzigerk » Wed, Feb 08, 2017, 11:07 AM UTC

abstractbeliefs wrote: post #128

gonehome wrote: post #94

Earlier quoted context omitted.

My dad is a neuroradiologist so I've seen a decent amount of the reading work (which is one component of the job - though a big one). I also thought it'd be well suited to ML, but I suspect the future is more suggestions and flagging things in scans rather than entirely replacing the doctor (I'd be surprised if this isn't happening already in some capacity). It seems risky to lose the human understanding and interpre…

The thing is, when you have 4 radiologists reading 100 scans each, if flagging and highlighting and generally improving performance of these personnel leads to two of them being able to process 200 scans each, the other two are out of a job. They have been, de facto, replaced by computers, even if the job role still exists. It's easier to see this if you break down the work not into images but into human-image-minute…

Unless the productivity gain is spent on doing more imaging. I think this aspect is underapreciated in many debates about automation, especially in health care. There is an insatiable demand for diagnostics for early detection of diseases or monitoring progression.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#148

Post by tomjen3 » Wed, Feb 08, 2017, 12:01 PM UTC

zardo wrote: post #36

tomjen3 wrote: post #18

Earlier quoted context omitted.

No doubt. The last people to be replaced are going to be software devs (because when you can write a computer program with an AI you can make the AI write the AI and you have general AI), cleaning ladies and probably police investigators.

The world's oldest profession will be the world's last profession.

Nah a 3D environment with the right force feedback input would be both much more convenient, much cheaper and much more private.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#149

Post by anigbrowl » Wed, Feb 08, 2017, 8:07 PM UTC

dx034 wrote: post #142

anigbrowl wrote: post #82

I bet almost none of those 200 engineers negotiated half as good a deal for themselves as any of the 600 traders.

Traders who just forwarded phone orders didn't make that much. The bank only gets the commission, there's not much the trader can do to increase profits. The huge bonuses are/were in prop trading, not in executing client trades.

All true, but I've never met a securities trader who wasn't ambitious, and ones that aren't don't tend to get hired. I'm still betting on the suspender brigade over the pocket protectors.

Re: Goldman Sachs automated trading replaces 600 traders with 200 engineers

#150

Post by monkeydust » Wed, Feb 08, 2017, 10:04 PM UTC

From someone who has worked in OTC technology trading for 10 years:-

- A lot of cash fixed income trading is open to automation, in fact it amazes me when I watch some execution traders in action. Their process is highly predictable: Get order into their execution blotter, send out RFQ to brokers, get back prices, check best price against a known value e.g. limit price, trade/no-trade.

- This holds true for perhaps 80% of flow for a wealth/retail fund which trade mostly liquid bonds under 1MM. For real-money and hedge funds that ratio is perhaps - AI is not the biggest driver of automation here but rather the openness of systems. By this I mean order management systems can interface to execution management systems that can interface to venues. FIX/FpML have helped this happen.

- I see this as augmentation for the trader rather than replacing him/her. Its a brand new colleague that can do the 'boring' work so they can go hunting for liquidity!