“Wall Street’s credit-derivatives traders, who before the financial crisis commanded $2 million of annual pay, are being replaced by machines as banks cut costs and heed new regulations.UBS AG, Switzerland’s biggest bank, fired its head of credit-default swaps index trading, David Gallers, last week, with no plan to fill the position, according to two people familiar with the matter.Instead, the bank replaced Gallers with computer algorithms that trade using mathematical models, said the people, who asked not to be identified because moves are private.”
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Can someone explain exactly why derivatives traders were getting paid $2MM/annually before their techniques were automated?
Is it possible that – like medicine before it – expert-systems analysis reduced an arcane knowledge base (“I don’t know how but they make us a lot of money so we have to keep them happy”) to a knowable and comprehensible set of decisions (“‘pay no attention to the man behind the curtain’ said the mighty wizard”)