See Also

When Vikram Pandit became CEO at Citi, the quantitative trading secret genius Shakil Ahmed was one of his first hires.

And despite the challenges presented by the Volcker Rule, which will soon prevent Ahmed from doing his job, prop trading, Ahmed is sticking around, according to Bloomberg. The decision to keep him (in a different role) is different from what seems to be happening at other firms dealing with the Volcker Rule, so the question is, why?

It might be obvious. First, because Citi made the same move with at least one other prop trader, Sutesh Sharma .

Second, because Ahmed is a big deal. He came from Morgan Stanley, where he spent thirteen years running the main proprietary trading businesses.

And the book, The Quants, (PDF here ) described Ahmed’s role at Morgan like this:

Ahmed [a skin-and-bones computer programming whiz from Princeton] did the fine-grained number crunching, searching for hidden signals in the market that would tell the computer which stocks to buy and sell. [Ahmed focused on the overseas market.]

. [He was] long considered to be one of the secret geniuses [at Morgan Stanley’s prop unit].

. [His salary in some years] vastly exceeded the take-home pay of top executives in the firm, including the CEO.

First he worked with Peter Muller, the head of Morgan Stanley’s Process Driven Trading unit, and then when Muller quit in 1999, Ahmed ran PDT (reporting directly to the president of the firm) for 7 years.

Then, according to The Quants, in 2006, PDT’s earnings dropped and Muller wanted back in — which made Ahmed furious, outraged that Morgan would hand over the reigns to their absentee leader.

So he retired from day to day responsibilities in 2006 and become a Senior Advisor to Morgan Stanley. Then, after a year of retirement, Ahmed says his former boss Vikram Pandit became CEO of Citi, and he was sufficiently tempted by the big challenge that he decided to go back to work for Citi.

Now Ahmed is Citi’s co-head of electronic trading.

He used to prop trade for Citi (his returns aren’t published), but now that Citi’s prop trading units are in the process of closing or shuttering, as Brad Hintz, an analyst puts its. Ahmed will be the head of a new market-making electronic trading group.

Market-making for clients is one way banks are allowing their prop traders to continue trading in light of new regulations (the Volcker Rule). Instead of the firm’s money, the market makers use clients’ money. Many prop traders who are given the choice to trade client money simply leave the firm (if their returns are strong enough, their likely next step is to start a hedge fund or join a rival). But Ahmed is staying.

Ahmed’s team (with Mukesh Patel and Manu S. Rana) will make markets in equities for clients.

His title is the same, so it’s hard to tell if it’s a promotion. However Ahmed is no longer listed under the company’s Capital Advisors Leadership Team .