The quant derivatives pricing teams at banks are where the stochastic calculus folk tend to head to. Their teams are generally highly respected in this area. Also, banks are doing a different job to funds. Banks are generally interested in assessing the risk or trading risk of these products, either on prop (i.e. with their own funds) or to clients.
Funds tend to concentrate more on statistical/machine learning/econometrics research approaches. The culture is generally more like a research institute thank a bank. They tend to hire more PhDs from Comp Sci, whereas banks will hire directly after MFE or straight out of undergrad.
Is that why physicists (vs computer scientists) are no longer recruited as actively for quant trading roles?
It seems like all the low hanging fruit has been arbitraged away. I've worked with a Math PhD from Princeton before in prop trading and he always lost money.
Machine learning techniques are becoming more common. Hence a shifting trend towards CompSci away from Physicists. The latter were often hired due to their modelling/probability capabilities in PDEs for derivatives pricing.
Also CompSci comes with a (perceived) "built in" ability to carry out good software development practices.
The quant derivatives pricing teams at banks are where the stochastic calculus folk tend to head to. Their teams are generally highly respected in this area. Also, banks are doing a different job to funds. Banks are generally interested in assessing the risk or trading risk of these products, either on prop (i.e. with their own funds) or to clients.
Funds tend to concentrate more on statistical/machine learning/econometrics research approaches. The culture is generally more like a research institute thank a bank. They tend to hire more PhDs from Comp Sci, whereas banks will hire directly after MFE or straight out of undergrad.