Compliance: A New Edge

I mentioned in my last post the dilemma with Compliance in the Trading world. To recap:

• Recognizing, Understanding, and meeting requirements of compliance is a necessity for every investor 
• Compliance careers are most usually limited to just compliance. (Sorry, Charlie. One does not jump from compliance to trading or typical analyst roles)
• Recent compliance (mainly those from Dodd Frank) has caused major shifts trading; volumes are down, firms are laying off, trading roles are hard if not impossible to come by

Recently, I've been meeting with as many traders as I can get my hands on. Asking for referrals from friends who may know of someone who knows someone, you know the drill, all in an effort to "treasure hunt" for a spot on the trading desk.

Through all of my treasure hunt discussions with my new and old trader friends in addition to what reading various publications covering the matter, I've begun to realize a portion of what is required for one to see success as a trader.  One's ability to keep on top of the market better than the next trader  ultimately determine winners from losers... as has been said to me, a trader's "edge". 

Given the enormous emphasis and effects of regulations in the current trading environment, what I'm beginning to see is the big bad police known as Compliance will cause and is already causing some huge shifts in trading. In fact, many traders will tell you, its already affecting them, although they have little idea why this might be.

With a new perspective on compliance and continuation of an understanding on trading, I've begun to understand how this might create an edge for a trader. If my job as a trader is keep an "edge" and, clearly navigating the new waters of a regulated trading environment has become a part of that, it's now my job to find creative ways to exploit trading given the headaches of regulation (and I use creative loosely here, I'm not looking for an indictment). 

Where there is difficulty, there is opportunity, right?

It's my understanding that many of today's traders lack an understanding of the upcoming regulations, and more importantly, are accustomed to trading in an unregulated environment. Perhaps, if I know the rules and I study the markets, I may have found my edge. It's what makes me different. and according to Goldman's sales trading, "differences sell." Knowing the how to play by the rules among men who may not know they exist or much less their effects in the market...well, that, my friends could me my edge.

So, while I wasn't initially thrilled about the compliance role, I know there is a need for someone in that space to make sense of what's going on. They're not hiring people to trade right now and I see that.  However, what I can see is that if I'm at the right firm, somewhere down the line, an understanding of compliance would be an asset to a trading firm. 


I think back to stories I've heard on those who traded well in the 90s (even through 2007) and why there were successful. Most every trader will tell your success in trading at this time depended on your ability to not only adapt but embrace the huge shift in trading taking place with the introduction of the electronic trading systems.

You could read thousands of accounts of traders without even a college educations sweeping those who had been in the business for decades all because they were on top of what was fresh and new. While others laughed or scoffed, they took advantage of the new market, and won.

Helllloooo Compliance. Let's sit down and chat a bit, shall we?