XTX’s Zar Amrolia: Why ‘Terminator’ robots will never replace human traders

Zar Amrolia started off as a quant at JPMorgan in 1988 when he was in his mid-20s. He drifted into trading and sales, with stints at Credit Suisse and Goldman Sachs, rose to the head of currency trading at Deutsche Bank and eventually became co-chief of XTX Markets.

Amrolia will step down in early 2023. Soon to join as deputy CEO will be Hans Buehler — a quant from JPMorgan. “Life has come full circle,” Amrolia jokes.

He speaks to Financial News from his office, which is renowned in trading circles for its flashy setting and perks for workers including video-game consoles, sleep pods and a bar with beer on tap.

XTX exploded on the scene in 2015, and made a name for itself as a cutting-edge trading platform that has no human traders. Instead, the firm employs about 180 “really smart” quants, computer scientists, mathematicians and network engineers that facilitate $295bn in lightning-speed trades each day.

Notably, Amrolia was at the helm when XTX leapfrogged his old employer Deutsche Bank in a ranking of spot currency platforms. XTX frequently finds itself in the top five of those lists, along with bank giants many times its size.

READ Zar Amrolia, LSE’s Julia Hoggett, JPMorgan and Swiss Exchange pick up top prizes at FN’s Trading & Tech Awards

His accomplishments over more than 30 years earned him the Outstanding Contribution gong at this year’s Trading and Tech awards, hosted by FN. As an interest rate derivatives trader at JP Morgan in the late 1980s, he came at the role from a different angle to his peers. “I started off as one of the first quants on Wall Street,” he says. “I’ve always been very interested in the synergies between finance and technology. That was before it was ubiquitous.”

After JPMorgan, he had stints at Security Pacific and Credit Suisse, moving to Deutsche Bank in 1995, growing its non-vanilla FX options offerings.

“In the exotic options space, one of the things we did was invent a pricing tool that allowed the salespeople to price exotic structures instantaneously. That involved solving hedging and technology problems.”

Interrupted by a four-year term at Goldman Sachs, Amrolia spent more than 15 years at Deutsche Bank. He was global head of foreign exchange between 2006 and 2011, and co-head of fixed income and commodities from 2011 to 2015.

From there, he became co-chief executive of XTX Markets along with the firm’s founder Alexander Gerko. Amrolia says the move from the German bank to the startup was a marked change: “Quants weren’t the heart of investment banking — they were somewhere between the middle office and front office. Here, they are absolutely the centre of the firm.”

He attributes some of XTX’s success during his tenure to being in the right place and the right time. “We had the tailwinds of MiFID and machine learning. Clients were disappointed with the large banks and the various scandals that occurred,” he says, referring to the revelation in 2012 that banks were manipulating the Libor benchmark rate, a similar scandal embroiling the FX market in 2013.

Despite XTX’s rapid growth, Amrolia is surprised other startups haven’t tried to tackle the institutional market. “I would have thought that there would be other participants like XTX who would enter the market.”

Instead, Amrolia believes would-be competitors took another path, tackling the nascent digital asset class.

“There are a lot of new players in terms of the crypto market such as B2C2 and Wintermute. All these new firms have entered that space. Crypto, as of yet though, is at the tipping point of becoming something which is an institutional asset class.”

Before the crypto crash in May and June this year, there was a good level of work being done to improve institutional traction for the asset class such as custody and brokerage services. Amrolia can see the allure of crypto for seasoned traders: “You want to trade a volatile asset class. The euro-dollar is kind of boring.”

While XTX does not have human traders, Amrolia still thinks there is a place for people at the trading desk.

“This isn’t going to be Terminator, where the robot traders wipe out the human traders. Both can exist within the ecosystem, but the ecosystem needs to be designed so that it is fair on both sides. They will have different market participants, value propositions, venues and products.”

READ XTX Markets’ Zar Amrolia steps down as co-CEO, JPMorgan’s Buehler named deputy chief

A dichotomy has already started to form, he says, between more high-volume, low-margin products being traded by algos and more bespoke and complex products left in human hands.

“Hedge fund clients who are really worried about cost of execution may say, ‘We’re happy to deal with standardised dates and strikes’. Real money institutional clients with more bespoke needs because they have contracts with different cycles and maturities — here, there’ll be a rationale for voice trading,” he said.

He reflects that the priorities of people in the industry have changed since he started his career. “Now it is about far more than just financial compensation.” He says he was lucky to get Sunday off, but now many firms need to offer flexible working. XTX has even hired a ‘head of events’ to organise weekly events for staff, he says.

XTX has reported record profit this year, taking home £667m in 2021 — a 42% surge from its 2020 net profit of £470m. Amrolia says it is now time for him to wind down his work in the City, to be with his family and friends and “do a bit of good on this earth”.

“Hopefully, I can do some charitable work, keep engaged in a different type of way other than looking at P&L numbers at one in the morning.”

CV

Born

May 1963

Education

1983-88

PhD and MSc in Mathematics, University of Oxford

1980-83

BSc in Physics, Imperial College London

Career

2015-present

Co-chief executive officer, XTX Markets

2011-15

Co-head, fixed income and commodities, Deutsche Bank

2006-11

Global head of FX, Deutsche Bank

2004-06

Managing director FX, Deutsche Bank

2000-04

Global co-head of FX, Goldman Sachs

1995-2000

Various roles, Deutsche Bank

1990-95

Director, derivatives marketing, Credit Suisse

1989-90

Vice-president for interest rate derivative sales, Security Pacific

1988-89

Interest rate derivative trading associate, JPMorgan  Management

To contact the author of this story with feedback or news, email Jeremy Chan

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