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Thursday, 25th April 2024 |
| Using a physics background in financial services |
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| John Patchell is a quantitative analyst with Nexgen Financial Solutions. Patchell is using his Ph.D in physics (opto-electronics) to write programmes for financial models. Using his mathematical background, Patchell shows the mobility a mathematical background offers - switching disciplines from physics to finance. |
Career path and educational background?
I began my education reading for a Science degree in Trinity College in 1993, and opted to study maths, physics & chemistry in the first two years of my degree. In the final two years I specialised in physics.
On completing this degree, I studied for a Ph.D. in the area of opto-electronics. This particular area combined two of the subjects which most interested me in my final two years of college - quantum mechanics and electromagnetism. My research was primarily related to the design and analysis of high power laser diodes, which involved implementing a number of numerical models to simulate how the optical field within lasers interacted the gain medium.  | | John Patchell |
Following this, I was offered a position as a research scientist with a company called Eblana Photonics, which had just been founded by one of my Ph.D. supervisors. My work there involved the design and fabrication of single wavelength devices, optical communication applications such as Fibre To The Home. Later when I was appointed as Director of Laser Design there, I realised that some of the numerical models which I was using were also used for financial applications, and I became quite interested in these applications. So I enrolled in the M.Sc. programme in Financial Mathematics in DCU, working on a part-time basis in Eblana Photonics during this time.
When I finished in D.C.U., I applied for a position as a quantitative analyst with the Risk Control department in Nexgen Financial Solutions. I have now been working in this role for just over a year.
Are your peers from similar backgrounds?
As far as I’m aware I’m the only person in Nexgen’s Irish operation with a background in physics. However a number of people in the Paris and Singapore offices have backgrounds in physics. It’s not uncommon to find people from physics backgrounds in quantitative roles.
What skills/aptitude would you identify as being key/beneficial to a career in your sector?
It is obviously essential to have an aptitude for mathematics and good IT skills in order to write programmes to simulate the payoffs of exotic financial options in an efficient way.
What aspects of the job do you like most?
I enjoy writing new programmes which often encourages me to learn new mathematical techniques and I get plenty of opportunities to do this in Nexgen, who structure derivative-based solutions for its corporate clients mainly in Europe and Asia and have an appetite for equity and commodity market risks as well as credit, interest rate and forex risk. This challenges me to learn about different financial models and ways of implementing them numerically, putting them in practice, and using them to calculate risk parameters such as the Greeks, so that the financial risks can be hedged and managed.
What aspects of the job do you like least?
Repeatedly using existing programmes to calculate the parameters associated with various transactions can be the least challenging aspects of my work. However there is a silver lining here as it provides me with an overview of the different transactions currently under consideration or being executed by the company.
How do you define success in your sector?
It is very rewarding to know that the management and the Board of Directors are being equipped with relevant and accurate risk parameters for the various deals which are being executed by the company in a format which is clear and concise.
What advice would you give to others who might like a career in your sector?
I would recommend the M.Sc. in Financial Mathematics in DCU as stepping stone from a career in physics to a career in finance for anyone thinking of pursuing a career in quantitative finance in Ireland. It is very helpful in introducing the mathematics which underpins the Black Scholes framework and it also had a number of very practical ‘hands-on’ programming courses. Another option would be taking the CFA exams.
A typical day in the office
Most of my work is project based within the small risk control team in Nexgen. The projects I work on can take anywhere from a couple of hours to one or two months to complete depending on their complexity.
The day can start with a meeting with my manager, who is the risk controller in Nexgen, in which he will outline the next task which I would like me to work on. He may follow this up with one or more documents which I will read over. Sometimes my new task will involve learning some new mathematical or numerical techniques which I haven’t encountered before.
However more often than not, I proceed directly to writing a programme to simulate the problem.
I spend about 60 per cent to 70 per cent of time programming and most of the remaining time reading.
I may interact with Nexgen’s database system and my colleagues to establish how a given transaction was structured.
Upon completion of a program I will price and calculate risk parameters for the relevant transaction and pass these results on to my manager. Sometimes the programs I write are used on a daily basis in Nexgen.
From time to time, I attend seminars on various areas of quantitative finance, some of which may be organised by NATIXIS, the parent company of Nexgen Financial Solutions. |
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| Article appeared in the June 2008 issue.
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