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A Career in Finance
Operations
Chuck Pedro
July 9, 2010
Points to discuss
• Introduction
• Stock market basics (証券市場）
• Work history
– Company description
– Job description
– Explain work, concepts, examples
Introduction
• Born in small town in New York State (suburb near New
York City)
• Went to college at Binghamton University, graduated
with B.S. in Electrical Engineering
• Moved to New York City in 1999
• Started career in finance IT in 2001
• Moved to Japan in 2009
Stock market - the basics
• What is a stock market? Investopedia.com says:
“The market in which shares are issued and traded either
through exchanges or over-the-counter markets”.
• What can you trade in a stock market?
– Mostly, shares of a publicly traded company. There are different
ways to trade stock, which can be described in different asset
classes.
What kind of asset classes?
• Equities – a.k.a. cash trading
– Buying or selling the common stock of a publicly traded company
– Buy 1000 shares of Sony; Sell 50000 shares of Nintendo
• Futures
– A contract to buy or sell something in the future at an agreed price
– Buy 1000 shares of Sony 6 months from now, at 2300 JPY
• Options
– A contract to buy or sell the option to buy (call) or sell (put) something
in the future at an agreed price
– A contract to buy 50 tons of sugar 9 months from now; if I want, I can
sell the option to buy the sugar to someone else
What kind of stock markets?
• Listed - NYSE, AMEX, PHLX, TSE, LSE
• OTC (over the counter) – NASDAQ, JASDAQ
• For options – ISE, CBOE, OSE
• Listed – stock is traded according to the rules of the
exchange; big companies usually trade on listed
exchanges; traditionally, has a trading floor
• OTC – stock is bought and sold with dealers; an OTC is
100% electronic – no trading floor; easier for a company
to trade OTC, so often has smaller companies
Jobs in finance - NMS
• 2001 – Started working for New York Stock Exchange
– Worked in NYSE Operations room; worked with department
called NMS – National Market Systems
– NMS connects all the major stock markets of the US
• Markets are connected thru NMS
– NMS receives real time trade and quote prices, distribute to
participating markets. This means the same stock, such as IBM,
can be traded on several markets.
– Trader can buy stock at whichever market has the best price.
At the end of the day, prices for that same stock at all the
different markets are very close - only a fraction of a penny
difference.
Jobs in finance - NMS
IBM - $47.54 NYSE
Trade, quotes Trades, quotes
NMS
CHX PHLX
IBM - $47.13
IBM - $47.79
Jobs in finance - NMS
• The job title – Console Operator
• The work - all consoles, no personal
desks; use shared systems
• Worked 2nd shift – 16:00 to 00:00 for 2
years. After 4pm, start running EOD (end
of day) scripts and stop processes; takes
several hours
• Backup data, run reports, make sure
systems are ready for the next trading day
Jobs in finance - NMS
• After 19:00 - assisted with stock market testing;
worked with NYSE, CBOE, any market that
wants to test
• Learned Unix and Perl, how to handle data,
production releases, QA, change control
• Production and test environment
• QA = quality assurance; this means test, not
production
• Use QA to test new software releases and
changes
Jobs in finance - Fidessa
• The company: British software company
that sells trading products, connectivity,
and more
– http://fidessa.com/
• Main product is an OMS – order
management system
• How does an OMS work?
– Server and desktop model; traders use OMS to accept client
orders or create orders, then send them to another system or the
market to be executed
Jobs in finance - Fidessa
Jobs in finance - Fidessa
Jobs in finance - Fidessa
• What kind of traders are there? In general;
– Sales trader: receives orders from the client
– Executing trader: executes the order, which means
he/she sends it to the market
• How does the Sales trader receive the order?
– Phone; client calls Sales trader, gives order
information, and Sales trader enters the order into the
OMS software
– Electronically – usually over FIX. This is the most
common way to send orders today – more popular in
US and Europe (FIX is my specialty!)
Jobs in finance - Fidessa
• The job title: Operations Specialist
• The work: member of Operations team; provide email
and phone support to clients, investigate issues
• What kind of issues did the client have?
– Stock symbols – can't find the symbol. In the case of an IPO
(initial public offering), client wants to trade a stock, but the stock
does not exist in the software. We make an update so that the
client can send the symbol
– order is rejected - investigate why it was rejected. Who rejected
the order? Could be Fidessa, or the market. Find out why,
explain to the client
– market data - client doesn't have price information on a stock. Or
worse, they believe the price is incorrect (stale)
Jobs in finance - Fidessa
• Other job tasks
– Releases - make changes after 4pm.
Software teams or clients request changes,
Operations team makes the change in
production
– When making changes, use clearly defined
steps, document it, test it afterwards, and be
careful!
Jobs in finance – GL Trade
• The company: French software company
that sells trading products, market data,
market access (now owned by Sungard)
– http://www.gltrade.com/en/
• Similar to Fidessa; competing products
Jobs in finance – GL Trade
• The job title: Technical Account Manager
(TAM)
• The work: help clients and handle all their
requests. TAM does these for the client:
– Setting up test environment, install software
– Visit the client, training
– Configure in production, go-live, and
continued production support
Jobs in finance – GL Trade
Jobs in finance – GL Trade
• While at GL, learned more about FIX
• What is FIX?
– Financial Information Exchange
– http://fixprotocol.org/what-is-fix.shtml
– FIX is a messaging protocol designed for the finance
and banking industries to be able to send financial
information. Mostly, it is used for sending orders. It
can be from client to a broker, broker to exchange, or
anywhere in between. It is free and open to anyone.
Jobs in finance – GL Trade
• Let’s start with an example – a cash equity order
• A cash equity order needs at least 4 pieces of
information:
– Symbol
– Quantity – how many shares?
– Side – buy or sell?
– Order type – market or limit? If it’s a limit order, you
must specify a limit price as well
Jobs in finance – GL Trade
8=FIX.4.2
A message has a tag and 9=152
value, such as 35=D
40=(some value). 50=TRADER_X
49=CHUCK_CLIENT
52 - sending time, in GMT 56=KAZUMA_BROKER
54 - side (buy or sell) 52=20100630-05:32:45
55 - symbol 34=3
38 - shares quantity 40=1
40 - order type 54=1
49 – Identifies who is 55=6758.T
sending the order 11=1234
56 – Identifies who is 21=3
receiving the order
60=20100630-05:32:45.875
38=1000
10=022
Jobs in finance – GL Trade
8=FIX.4.2
54 - side (buy or sell) 9=152
54=1 – buy 35=D
54=2 - sell 50=TRADER_X
49=CHUCK_CLIENT
40 – order type 56=KAZUMA_BROKER
40=1 - Market order 52=20100630-05:32:45
40=2 - limit order 34=3
40=2
44=(price) - need to specify 44=2304
if it's a limit order 54=1
55=6758.T
11=1234
21=3
60=20100630-05:32:45.875
38=1000
10=022
Jobs in finance – GL Trade
8=FIX.4.2
35 - message type 9=152
35=D
35=D - new single order 50=TRADER_X
35=F - cancel; if the order is 49=CHUCK_CLIENT
still open (it has not been 56=KAZUMA_BROKER
fully executed yet), this 52=20100630-05:32:45
will cancel the order. 34=3
broker or exchange has 40=2
the option to reject the
cancel 44=2304
35=G - amend; if the order is 54=1
still open, client can 55=6758.T
request to change the 11=1234
order; usually, it would be 21=3
to change the quantity or
price 60=20100630-05:32:45.875
38=1000
10=022
Jobs in finance – GL Trade
8=FIX.4.2
21 - handling instruction - 9=152
how to handle the order 35=D
50=TRADER_X
21=1 - DMA, aka low touch 49=CHUCK_CLIENT
21=3 - high touch, manual, 56=KAZUMA_BROKER
CARE, BI (broker 52=20100630-05:32:45
intervention) 34=3
40=2
44=2304
54=1
55=6758.T
11=1234
21=3
60=20100630-05:32:45.875
38=1000
10=022
Jobs in finance – GL Trade
• what is DMA?
– Direct Market Access.
– The order goes straight to the market to be
executed. This is electronic, so orders can be
processed very fast. Often, orders can be sent
and executed in less than a second. Clients
may use special software that automatically
sends orders throughout the day.
Jobs in finance – GL Trade
• What is a manual order?
– The order goes to a broker, and he/she
manually executes it. This would be an
example of the Sales trader receiving the
order and sending it to the execution trader,
who sends it to the market. This is not fast like
DMA.
Jobs in finance – GL Trade
• What happens when an order is sent to
the market? A simple example;
New order for 1000 shares
Broker
Acknowledge
Exchange
Full fill for 1000 shares
Jobs in finance – GL Trade
New order for 1000 shares
Acknowledge
Broker
Partial fill for 400 shares
Partial fill for 400 shares
Exchange
Full fill for 200 shares
Jobs in finance – GL Trade
New order to buy 1000 shares @ 2310
Acknowledge
Broker
Amend request to change price to 2313
Amend accepted
Full fill for 1000 shares @ 2312 Exchange
Jobs in finance – GL Trade
New order to buy 1000 shares @ 2310
Acknowledge
Broker
Partial fill for 500 shares
Cancel request
Cancel accepted Exchange
Jobs in finance – Bear
Stearns
• The company: major US investment bank.
– First time to work in a bank
– The first bank to fall from sub-prime mortgage
disaster
• The job title - Level III Support Analyst
• What is a level?
Jobs in finance – Bear
Stearns
What is a level? Most support teams of finance
companies have the concept of levels
• Level I - the most basic issues; client cannot
connect, network issues
• Level II - business issues; problems with order,
order is rejected, order routing, client setup
• Level III - anything not solved by I and II.
Software bugs, software maintenance, serious
issues
Jobs in finance – Bear
Stearns
• The work - maintain the application
environments
– work with level II users
– setup new clients as requested
– handle production issues
– make changes requested by users
– install new software releases
Jobs in finance – Bear
Stearns
• March 2008 – the ball drops – Bear
Stearns files for bankruptcy!
• June 2008 – JP Morgan buys Bear
Stearns
• September 2008 – Lehman files for
bankruptcy!
• September 2008 – Barclays buys US
Lehman; Nomura buys Asia Lehman
Jobs in finance – A year in
transition
• May 2009 – Resigned from JP Morgan,
moved to Japan to work on farms. Yes,
farms!
– Ehime (mikan)
– Nagano (vegetables, cows)
– Gifu (more vegetables)
– Kanagawa (daikon, strawberries)
Jobs in finance – A year in
transition
• November 2009 – back to finance
• The company: Barclays Capital
– Investment bank based in London, with major
offices in NY, Tokyo, and Singapore
– Well known for Fixed Income; new to Equities
– After buying Lehman, took big jump in
Equities
– Currently building Equities business in Asia
Jobs in finance – Barclays
Capital
• The job title: FIX Connectivity AVP
• The work: member of FIX Client
Onboarding team
– Assist clients to get connected over FIX
– Setup software, solve production issues
– Help with building Asia Equities business
Jobs in finance – Barclays
Capital
FIX
Client Barclays systems Exchange
FIX, proprietary API
Jobs in finance – Summary
• Finance IT – fast paced and always
changing
– Business changes, so technology must
change as well
• Investment bank has two sides – business
and IT
– Business makes the decisions, and needs IT
to build a bigger business
– Sometimes, conflict occurs
Jobs in finance – Summary
• Separation of knowledge
IT knowledge business knowledge
common
knowledge
Jobs in finance – Summary
• What happens with a separation of
knowledge?
“We need this software change. It has to be
done today.”
“It’s not safe. We need to test it, then put n
production. It will take 3 days.”
Business IT
“Not good enough.”
“Ok, we can have it ready by the end of
tomorrow.”
“Okay.”
Summary of 8 years in
Finance IT:
• Do your best, and don’t worry.
