Interview with Simon Mescal: Stock Market Technology Specialist

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simon mescal

Interview with Simon Mescal: Stock Market Technology Specialist

Hello Simon Mescal, can you tell us a bit about yourself?

Hello Erika.

I’m from a city called Cork in Ireland, it’s the second largest city in the Republic of Ireland with a population of about 300,000.

Cork people are a bit rough around the edges – we’re blunt if a bit belligerent and our sense of homour is somewhat gritty. I’d like to think I’ve taken some of those qualities with me.

I like to engage in physical activity for leisure while mental activity (of a mathematical nature) pays the bills. Although I also love leisurely mental activity, especially if it involves debating people on subjects I understand, or at least think I understand.

What are some of your key memories of growing up in Ireland.

I grew up in what you would call a nuclear family in a middle to upper class household in Cork. My parent always strived to give me and my siblings (me being the middle of three) exposure to a wide variety of activities, and sport was core to that upbringing. In my younger years, tennis was a staple for the summer months and I played rugby the rest of the year, with sprinklings of other sports such as soccer and golf throughout. The family unit was pretty strong and we used to thrive on heated discussions around the dinner table.

I was a bit of a late blossomer in school, I didn’t get my act together until my mid teens, primarily because my attention span was so poor (still isn’t great) and my lack of effort. Teachers in Ireland love giving lots of homework so with my trouble focusing I would have to spend hours on the homework, often missing out on more enjoyable activities.

How did you end up moving to the US?

I caught the travel bug in my early twenties, having spent two summers in the US on a working holiday visa, six months in Germany, a year traveling in Australia and South East Asia, followed by a masters degree in Scotland. At that point I felt getting a ‘real’ job was long overdue. I was offered a job by a capital markets consulting company, called First Derivatives, that at the time did most of its business in New York and London. The main stipulation on joining the company was to be willing to travel extensively at short notice. Eager to get a challenging start to my career and still carrying the travel bug, I jumped on the opportunity. Within three months I was in New York.

What are some of the major cultural differences between the US and Ireland?

In many respects the cultures are similar, though there are notable differences.

The US is more individualistic, Ireland is more family and ‘clan’ (social circle) oriented.

Irish people abhor ego, ego is more acceptable in the US.

Spectator sport is taken a lot more seriously in Ireland than in the US. Participation sport is taken a lot more seriously in the US than in Ireland.

You have to travel hundreds of miles to notice a difference in accents in the US. There is a lot more variation in accents between different parts of Ireland. You don’t have to travel far in Ireland to notice a different accent.

Tell us a few things that we may not know about New York.

New York City is not the state capital, Albany is.

New York is filthy and smelly, but that’s one of the reasons I love it.

New Yorkers are known to be rude, but that’s not really the case. In a situation where there’s hoards of people all the time, many of whom have time constraints, brushing past people and engaging in very short to the point exchanges becomes necessary. So I guess you could say they act as if they are rude, but it’s not coming from a sinister mindset, it’s out of necessity.

You currently work for the US Securities and Exchange Commission, to the extent you can, please share with our readers some of the projects you are working on.

I am working on a project which aims to provide a set of computational tools to assist analysts in finding violations in trading markets. The application concentrates on high frequency trading markets. High frequency trading in short is computers making trading decisions. In 2014 for example, 75% of equity trading volume in the US originated from orders placed by automated trading systems. An example of a market violation we look for is ‘spoofing’, which involves placing many orders on either the buy or sell side of the market and canceling the orders before they are executed. On seeing the large volume of orders, other market participants are fooled into thinking the market is headed in a certain direction, they act accordingly – driving the price in the direction the spoofer intended, at which point the spoofer executes a trade on the security, capitalising on the temporary price spike. Finding such violations in billions of trade and quote records is like finding a needle in a haystack.

Do you have a few financial tips to share with us?

Yes, but they have little to do with my experience as a high performance database specialist in the finance industry.

There’s a lot to be said for Warren Buffett’s advice of “be greedy when others are fearful and fearful when others are greedy.” People are like sheep when it comes to investing, don’t be one of the sheep, assess the value of an asset in the cold light of day, independent of societal influences.

Invest in companies (or other assets) for which the return over the long term is bound to be high. The question is how can you tell which companies they are. Understand the business model of the company, get a gauge as to the quality of the people running the business. Is there going to be a need for such a business in the years to come and is the company in a good position to stave off competitors? Once you’ve identified such a company or asset, load up on it.

In a few words, what are some of the key technological changes society is going through.

I’m keeping a very close eye on machine learning. Neural networks have been a subject of research since the 1950s, but only in the past five years or so (due to an abundance of data and computer power) has it become practical. The trajectory of the technology is not linear, it’s exponential – it follows the exponential advances of computing power and data sizes. There is a crucial difference :

30 steps linearly is

1,2,3 …. 29,30

30 steps exponentially is

1,2,4,8 ….. 500 million, 1 billion

So when guessing what this technology will deliver say 15 years from now, one should not linearly extrapolate recent advances, as is the natural tendency, but rather double the progress every year or so. As such, it is reasonable to assume that the type of things possible 15 years from now will be so astounding that if somebody were to describe it to you now you’d say they’re nuts.

You are a part of New York Skeptics. Tell us what the skeptics are and what made you one of them.

I’m not exactly a fully fledged member, but I’ve attended some of the presentations they’ve hosted.

It’s a club that promotes critical thinking. I’ve been drawn to the notion of critical thinking in recent years. I love taking a subject matter, cutting past the BS and assessing it in the cold light of day with a view to understanding it – what are the factors involved, what are the factors that appear important that are not, where has society in general got it wrong and why. I find it empowering to have a clarity of thought on matters which for whatever reason – political correctness, taboos, lazy thinking – the mainstream has got it wrong.

On some subjects it takes you to controversial territory, but developing your critical thinking muscles is well worth it.

What is one of your best travel experiences?

I traveled South East Asia back in 2004 – Thailand, Cambodia, Vietnam and Laos. In Vietnam I traveled from Saigon to Hanoi, stopping off in various towns along the way. In every town I stopped in, I would rent a moped and drive out into the nearby countryside, past tiny villages, rice paddies, buffalo drawn carts, the works. On a number of occasions, having stopped at the side of the road, I was invited by a family to join them in their dwellings. They would share with me their morning catch, some rice wine, tropical fruits or whatever they were having at that moment. We’d do our best to communicate, but they didn’t speak English and I didn’t speak their language, we just enjoyed the moment. It was a wonderful experience to be given such hospitality by peasant farmers for nothing in return.

Anything else you’d like to share with our readers?

Traveling outside your comfort zone is a fantastic and worthwhile experience, I try to get to a new country every year. Whenever I do it I come back refreshed, more resilient, more confident, more educated. If you’re anxious about traveling to exotic lands, don’t dwell on it too much, just buy the flights, that way you’ve forced yourself to get ready for it. Travel on your own or with one other person – a crowd will shield you from experiencing the environment, and you need the flexibility to decide on a whim what to do and see, and where to go next.