One newly prominent postcrisis regulatory concern is model risk vulnerabilities in financial models that can have dangerous, systemic consequences. "Markets can just erratically shift," says Peter Carr. "People learned the hard way that they can be wrong." A pioneering quantitative trader who is global head of market modeling at Morgan Stanley, Carr has acknowledged the inevitability of closer oversight even as some of his peers have pushed back. He calls himself "a little more optimistic" and sees an upside. The 53-year-old, who joined New Yorkbased Morgan Stanley two years ago after seven years as head of quantitative research at Bloomberg, explains: "It's one thing to pass laws that say, 'Don't do proprietary trading.' But in the end this has to be quantified before it can be operationalized. There is a real opportunity for quants to do things they're not so used to doing, such as optimizing on capital." Carr joined a quant pantheon when he won the 2010 International Association of Financial Engineers/SunGard Financial Engineer of the Year award; the honor had previously gone to Nobel laureate Robert Merton and hedge fund legend James Simons, among others.
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