Quantitative Trading in the News

The NY Times reported that Morgan Stanley's productive quantitative trading program was going to be spun off into a seperate company. Apparently Morgan Stanley will retain a share of the new company, which will be called PDT Advisors, derived from the previously called Process Driven Trading unit.

That's a good way to think of quant trading, or system trading. It really is a process, and trades (IMO) should be driven that way. I guess it works too... The PDT unit has been one of the most profitable for Morgan Stanley over the past decade. From the article:

The strategy has been immensely profitable for Morgan Stanley. The Process Driven Trading unit generated an estimated $4 billion in profits in the 10 years through 2006, according to Scott Patterson’s book, “The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It” (Crown Business, 2010). Those gains were after the unit took a 20 percent slice, according to the book. That means that Mr. Muller and his team were paid about $1 billion over a decade, making them among the most highly paid executives in the firm.

Good Trading...