For this edition of Into the Business, Estimator travelled to Amsterdam to interview Olivier Smit, a graduated Econometrician who is currently working part-time as a Trading Assistant at Optiver. Olivier finished his Bachelor in Econometrics and Operations Research at Erasmus University majoring in Quantitative Finance. Now, he is currently doing his Masters in Quantitative Finance at Erasmus as well. Olivier is also a former member of the freshmen committee at FAECTOR!
Olivier: I started with my Masters about one and a half years ago. At the same time I started working at Optiver in a part-time position as a Trading Assistant, combining my studies and working 20 hours/week on the trading floor. Once I start writing my thesis, I will temporarily leave Optiver and re-join the company in September as a Trader in the trainee class.
How did you end up working at Optiver?
Initially, I had planned on taking a gap year after my Bachelor, but in May of my final bachelor year, I visited an Optiver In-House Day. We had a tour of the office, and they talked about what they do and how they do it. I really liked the atmosphere, the company’s culture, and the people I met. It is a sort of relaxed, informal atmosphere, but people all work towards a common goal and are passionate about what they do. It is pretty different from what you see in banks, for example. Although Optiver is also part of the financial world, the atmosphere is very different in my opinion. In order to be considered for the part-time role, I had to take a speed mental mathematics test and had a technical and an HR interview which went pretty well. Since you need to be enrolled at a university in order to be eligible for the position, I decided to start with my masters directly after my Bachelor while also working here part-time. What I also really like is that they accommodate a relatively flexible schedule for students. For example, when I had to do the seminar for my masters, which is working in groups full-time for about ten weeks, they said I could take unpaid leave for this period and return once the seminars are over. We actually have a lot of people here coming from Rotterdam. Most of the part-time Trading Assistants are from Rotterdam, and many of our full-time Traders are Econometricians from either Erasmus University, University of Amsterdam or VU.
Can you tell us a bit about what you do?
As a Trading Assistant, I assist the Traders. Due to regulatory reasons, I am not allowed to trade myself yet. Also, you need proper training in order to understand how the systems work. What I really like is that I can sit with traders and see what they do and listen to their discussions. They challenge me by asking me what I would do if I were in their shoes. It enables you to learn from the experts. Especially in the first months, I was very exhausted every day, because I was learning so much and had to process everything. What I also found really nice was that it is sort of an extension of what you’re studying. You see many things from Econometrics coming back like regressions, betas and standard errors. Trading is all about uncertainty and risk, something we learn so much about in our studies.
So now you’re a Trading Assistant. After your Master will you become a trader?
Yes. I will start in a trainee class with seven other Trader trainees. With this group, one follows a very intensive programme. It begins with the basics of trading, such as learning what an exchange is and what a share is. Optiver hires people with very diverse backgrounds; hence everyone starts learning the theory from scratch. People who study Mathematics have a different knowledge level when it comes to finance concepts compared to that of an Econometrician, for example. The learning curve is very steep, so you can end up being an expert in about one or two months. After three weeks of theory, we will get about five weeks of Simulation trading. It’s pretty realistic and definitely the best moment to make mistakes and learn from them because there are no real consequences. After the trainee program, you will be assigned to one of the teams on the trading floor where you will start trading with real money. So, hopefully, by November I will make my own trades on my own account.
How do you like working here?
I like it a lot! I especially like the fact that it’s very challenging. You’re actually being challenged every day. People try to get the best out of themselves and each other to make the most out of every day. Everyone is positive and constructive towards each other. We have many different teams around the floor, but everyone is working towards a common goal. This requires a good level of collaboration between, for example, a Researcher and Trader, whose personalities might be very different from each other.
Do you find it hard balancing work and studies?
In the first months, it is not easy at all. During the beginning of my Masters I had many courses. Per week, I would spend three days at the office and be in Rotterdam for two or three days, which was pretty tough. Working even just three days here takes up quite a lot of your energy, and you may have to miss some lectures to make it work. That is why you have to make sure that you catch up on your studies during the other days and during the weekends. However, if you’re disciplined enough and you find the drive and motivation to keep on going, it’s doable. It definitely requires planning and discipline, and you also have to be a bit realistic about a possible study delay.
What does a typical day look like for you?
I’m working as a Trading Assistant for the Equity and Brazil team. The Equity team trades European equities, so all the options and shares on European exchanges. The Brazil team trades Brazilian options and stocks, and they also have different trading hours because of the time difference. Both teams have their own characteristics, so it’s nice to see a bit of both.
Although you do not trade as Trading Assistant, you can add much value. We have to check if all requirements are met, if we’re actually making the money we think we’re making, making sure all the databases are up to date. It’s sort of straightforward, but it’s extremely important. These so-called routine tasks take one or two hours of my day on average.
Besides that, I work on other projects, for instance a project in which we calculate market reactions to certain events. It is very Econometrics related, as it involves doing beta regressions. You actually benefit from what you have learned at university and can put it into practice. This usually takes a couple of hours. I have regular meeting with my Team Lead, other Trading Assistants, and Data Analysts to discuss what we’re working on to get everyone aligned. Usually, throughout the day, I get some requests to help colleagues with any problems they might be having, for example, with their databases or excel files. This can either take up ten minutes or the rest of your day depending on the complexity of the problem. In my spare time, I shadow Traders to see what is going on in the market.
What’s the most interesting project you have worked on?
If one company has an event, another company might react to that, which causes some kind chain reaction. For example, Apple sold many iPhones this year, and they have these figures; what can we expect other companies to have? Can we trade on that? What are the risks involved? These are actually part of a bigger project in getting an overview of all the companies in trading on factors that we are interested in. In a way, you have an automated version of events that are happening in the market, and you can predict that certain things will happen. It can lead to extra profits or extra information. If you know a little bit more or your idea is slightly better than the rest, you have this edge and can outperform the rest. This is a very nice project. I really like how it is going to be used by lots of Traders, so the impact will potentially be very big.
Is your thesis going to be related to things that you have done at Optiver?
Slightly. My thesis is related to the stock markets, but I’ve chosen to write it academically. If you work at Optiver full time, you will still have to do these routine tasks and other projects that have nothing to do with your thesis, so it might cost you extra time. My thesis will be about how oil prices affect stock markets. I tried to pick a subject for which finding data is not too hard. You hear about people who have to spend months just getting their data and cleaning it up to make it usable for their thesis. I didn’t want to do that at all. I just want to get data and do the “fun” stuff, the analysis, the regression, that’s what I am interested in.
You mentioned you also do a lot of regressions and Econometrics related things. Do you use the same program that you use in econometrics?
I’ve used quite some new ones but have also encountered old ones. Python is used more frequently and MATLAB, even though we use it a lot at university, not so much. I’ve also gotten to know a lot about databases like SQL, very good stuff actually. I worked with Excel and VBA, something I initially was not familiar with at all, but now I think I am pretty good at it. Summarizing, mostly Python, SQL, and Excel is used, whereas Python is probably the program that is used for the most interesting projects. It’s also the most useful for my thesis.
And what about R?
R is pretty similar to Python. It has to do with complete systems and servers. We just have to pick the right tools that we can share with each other, so it is easy to use for everyone. It just depends on the analysis. Maybe for one application R might be slightly more useful. But of course, training-wise, all these elements are more sophisticated than what we have learned before. There are also some Econometricians who did not end up as a Trader here but started in full-time roles such as Data Analyst or Researcher, two positions in which the knowledge that Econometricians have gained at university comes in very handy.
What skills are valuable to work here?
There are some obvious ones. Mathematically, you have to be strong. You have to be able to focus for a bit. The trading floors are open from 9 to 17:30, and it is quite intense. You have to be able to perform under pressure. Things can get very hectic. You have to be able to deal with that while staying rational. People here really challenge themselves and each other; being mediocre is not good enough. Of course, you can have an off day but always try to improve and learn from your mistakes. No one is perfect. I’ve made plenty of mistakes. Try and reflect afterwards to not repeat them. That’s how you learn. That’s how you keep learning. You don’t just learn by walking away from everything that is hard. The way people treat each other here is nice and informal, not hierarchical, which I think is special. It does have to suit you because sometimes indeed it’s easier to have a straightforward company structure, while over here it is more interconnected in terms of taking the initiative, which requires being assertive. As a Trading Assistant, I really react to a lot of diverse requests. In some cases, I can already foresee what is going to happen, so I act pre-emptively. If I have the idea something is going to break down tomorrow, I make sure to look at it now. All in all, taking the initiative, being quick and interested are the most critical factors to be successful.
As we are walking around, we noticed how diverse the company is. Are there many internationals working here?
Yes. We have more than 50 nationalities on the Trading Floor. The unwritten rule on the trading floor is that we always speak English. Even if you are in a conversation with only Dutch people, this should take place in English, as otherwise, you are excluding the internationals from joining the conversation later. Transparency is important, and everyone should be able to get involved with no language barrier. Most of the Trading terms are much easier to explain in English anyway, which makes it easy to stick to the rule.
Do you have any advice for the students reading this article? What would you have liked to know when you were in your final Bachelor year?
There are a couple of things I want to share. The obvious part: stay motivated, be sharp, go for it. It’s also helpful to see the bigger picture and remind yourself what you want to get out of this experience. If you do that, it’s also easier to lay out the steps to achieve it. That has helped me a lot to also really stay true to myself. It might be tempting to go to other companies that are more flashy, cool or hip because all your friends like it, but in the end, it doesn’t matter because you are the one who is going to be spending your time at the company. Therefore, I think it’s really important to listen to yourself in that sense and just give everything you have.
It seems like you really know what you want to do with your life. Were you always in this position?
Not really. I was also once at a position that I do not know what I want to do after econometrics. I found out that I wanted to do something at Optiver just in May of my final bachelor year. Even that was sort of a guess because how much can you really know after spending about 4 hours at an In-House day? Fortunately, it ended up well, and I really like it.
Before the in-house day did you go to any other career event such as ECD, LED?
To be honest, no. I was lazy.
Then what made you decide to go to the Optiver In-House day?
So, throughout my 4th year, I decided I want to do a gap year related to the financial markets, so I started looking around, and of course, banks seem to be an obvious choice. So I tried that, visited the banks, and I thought it seemed nice. However, then this (in-house day) came around, and some of my friends were going, so I thought why not; could be nice, especially because it’s in Amsterdam, as I’ve often seen it in the FAECTOR magazines. I gave it a try, and it was so different from what I had learned or seen before. I felt an immediate match with the company. I ended up taking no gap year and didn’t even have to force anything. It just kind of happened. You just have to be open but don’t force yourself into a position that you really don’t like. You can step out of your comfort zone, but there’s no rush. You are still young, doing a great study, and we are in a prestigious spot to land a job. I wouldn’t worry about finding a job, but the difficult part is finding something that you really like. Also, what I realize is that many people think that the first job is a very big deal, and in some sense it is, because it is in a way a major step. However, when I think back of every step that I thought would be a major step, like starting my studies, starting my masters, starting a real job, it really wasn’t that big of a step. So I think it will also not be a big step in the future. No need to stress out. You can do it for a couple of years, and if you don’t like it you can move on to another job. Or if you do enjoy it you can stay. So I’ve tried to sort of rationalizing it for myself and indeed go with the flow, see what it is, try to enjoy it at least.