Morning Coffee: French Morgan Stanley trader in intense bidding war chooses nice guy. Is quant code like an open can of Coke?

First the hedge funds came for the basis traders. Now, it seems they're coming for the volatility traders. They're not alone. Banks want the volatility traders, too.

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Bloomberg reports that Mehdi Belhachmi a French volatility trader whom we estimate to be 43-years-old, has been the lucky recipient of a rush of job offers. 

While much of the market applies for jobs with little or no success, Belhachmi - who has spent nearly 14 years at Morgan Stanley and who graduated from the École Nationale Supérieure des Mines de Nancy in the distant past - has been hotly pursued by assorted top firms.

Goldman Sachs, for example, wanted Belhachmi for its co-head of volatility trading alongside Paris-based Jules Grunner (a graduate of École nationale des ponts et chaussée, another French Grande École).  Goldman made Belhachmi an offer. Belhachmi accepted, and resigned from Morgan Stanley a few months ago. He was due to join Goldman in August after a presumed summer sur la plage. 

Unfortunately for Goldman, Belhachmi received some other offers while he was on gardening leave. Bloomberg reports that three hedge funds tried to hire him. Belhachmi then decided to ditch Goldman for Taula Capital, London's biggest new hedge fund run by Diego Megia, an ex-Citadel and Millennium portfolio manager who is widely said to be a very nice guy. 

That decision means that Goldman Sachs is bereft of its incoming head of volatility trading, and that it presumably needs someone else at short notice. It also means that two other hedge funds (at least) are still looking for portfolio managers in the area.

Why are volatility traders like Belhachmi so hot right now? It helps that FX and rates volatility are high and likely to remain so amidst uncertainty induced by tariffs.  Citi has vacancies in the area after Francesco Guercio, its head of European gamma trading, and Dimitry Levin, head of US non-linear rates trading, left in recent months. Hedge funds have been swapping volatility traders too. 

It's a reminder that, even in a market where banks are squeezing costs hard, there will be areas making good money. And that the people who populate them can name their price(s). Presumably, Belhachmi won't change his mind again.

Separately, is the code that powers quantitative trading like the recipe for Coca-Cola, or like a can of Coca-Cola itself? 

It's a question central to the sorry situation of 36-year-old Cambridge graduate Richard Ho, whom Bloomberg reports is being pursued by Headlands Technologies LLC for allegedly stealing its source code. There have been many such cases before, but Ho's situation is particularly precarious because his case is being heard in a criminal rather than a civil court, and if convicted he faces 10 years in prison.

Ho, who was hired as a quantitative researcher in 2019, is arguing that source code is like a can of Coke that goes flat over a period of time and loses its value. Headlands is effectively arguing that source code is like the recipe for Coke and therefore has value in itself. A date for the trial has yet to be set. Jurors will have to decide. 

Meanwhile...

Financing activities, in which banks make loans secured against the assets of hedge funds or private equity and credit funds, are thriving. Last year, Goldman Sachs made over $9bn in financing revenues - double the level of 2020. (IFR) 

Treasury traders are being very wary and submitting daily risk queries, stress-testing portfolios, and shrinking swaps positions. No one wants a massive loss. (Bloomberg) 

The Swiss government wants UBS to hold another $26bn in capital. (FT) 

There's been a rush of junk bond issuance ahead of the resurgence of trade tensions in July. (FT) 

CLO investors are bifurcated between those that have specialist teams to exploit poorly drafted credit agreements and those that don't.  (Financial Times) 

Peel Hunt now wants people in the office four days a week instead of three. (Financial News) 

HSBC has a 7,700 person desk shortfall and is leasing some new space at Canary Wharf. (Bloomberg) 

China wants to build its new British embassy near three data centres close to Canary Wharf and the City’s Square Mile. (Financial Times) 

Julian Salisbury, the former Goldman Sachs partner now at Sixth Street, says private equity funds have "a lot of bad vintage assets" and that investors are applying “incredible pressure” to have their money returned. (Bloomberg) 

HSBC might want former McKinsey boss Kevin Sneader for its new chairman. (Sky) 

Mark Tucker, HSBC's former chairman, might become chairman at AIA group. (FT) 

"Every student who is not a complete idiot will never be interested in working at JPM - JPM is simply missing the point, the best analysts leave, but they can still be top analysts..." (X) 

How people lose their jobs now: "Imagine waking up one morning and lying in bed, checking your overnight emails, when you see a message from your company’s chief executive. It says a lot of people are going to be laid off. The next email is worse: you are going to be one of them..."  (FT)  

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