Sporting knee-length hair tied into a bun with a colourful scarf and married to a flame juggler, Jessica James isn’t your typical quant trader. A Christ Church PhD Physics alum and now Managing Director at Commerzbank, James speaks with levity and self-assuredness, a rare duality in the finance sector.
While many from my cohort are making the jump from physics to finance, it was more than unconventional for James in ‘94: “It was absolutely weird of me to do so. I was trying to write up my thesis and thinking I was unemployable, and my supervisor, Patrick Sanders, came into the office.” He had received this “funny letter”, anticipating James’ potential interest. It was from the First National Bank of Chicago, who were moving into the area of financial derivatives and looking for PhD Maths or Physics students. She was called onto the trading floor to explain her research to various traders and salespeople, before being flown to Chicago for another interview. “Business class!”, she whispers in mock awe.
Physics and finance may share certain mathematical foundations, but there are clear differences between the two worlds. “Physics is about studying the foundations of the universe. Finance is about studying a man-made system that doesn’t always behave how you think it will. I’ve always enjoyed it. It’s fun. It’s fast-moving.”
Ambiguity in jargon is another key difference. When somebody in science uses the term force, its meaning is generally agreed upon. When someone talks about yield or convexity in finance, they could be defined in very different ways, depending on the context and the speaker. “The big change is the lack of precision of the vocabulary. It’s easy to think you understand something in finance, but when terms are ill-defined, you might not. Physics is mostly a zero-bullshit zone”, she says.
“Finance tends to focus on the future and the now, and data is, fundamentally, historical. Yet it’s a gold mine – especially today, when sophisticated analysis is increasingly used to uncover trends and behaviours – however, it’s often deleted, forgotten, or ignored.” It’s always a red flag when someone says “but this time it’s different”, be it an ex-partner or a teetotal friend, James explains that this is particularly true in finance. “It’s like the climate”, she tells me. “The climate can fluctuate in unexpected ways, and so can the market, right? Just because there hasn’t been an ice age recently doesn’t mean they won’t return in their time.”
While at school, James was the only one doing Physics and Chemistry: “15 years in a convent school put me off God forever. But I understand why science and religion are often so conflated”, she says, explaining that she views both as trying to better understand the rules of the universe. As the sole woman in many rooms, including a weekend away as the Managing Director at Citibank, James has never minded being the odd one out: “I don’t care if they think I’m different. I was smarter than most of them.” I fully believe her. “It is tricky being a woman in finance. How many technical disciplines are there where you could say that women are equal? And, you shouldn’t have to be tough and immune to remarks that shouldn’t be made. But, it never really bothered me.”
While traditional routes into banking are competitive, James stresses the importance of getting into the right place and avoiding a mundane job. Her advice? Get in early via the internship-turned-graduate-scheme pathway. “Oxford and Physics give you the ability to think critically and believe in your own opinion and your own knowledge”, she says. “This helped me to thoughtfully reflect on challenges and gave me the courage to recognise that if something felt off, it probably was – and it didn’t mean I lacked ability.” This mindset has been the cornerstone of James’ career.
“But, the one thing that is the hardest, but the most important, is to understand where you fit into the organisation.” She tells me that when fixing code, processing data, or completing spreadsheets, we should be asking: why? Where is your organisation making money, and why does your job exist? It’s important to not be stuck in a bubble, James stresses, not just in finance but in any job. This understanding will push you to find originality in the way that you work, and perhaps do it better than other organisations: “Knowledge is power, and often the knowledge that is the most powerful in an organisation is who does what and why.” She believes in keeping a foot in more than one world, and, thereby, tapping into more opportunities.
“I had never seen five o’clock from the front before, only from behind.” The crazy hours in finance aren’t a recent development, although James prioritised her hours off work just as much as those she spent on the trading floor. Her secret was to not break stride and make no eye contact with anybody as she got off work. She quickly realised that “you’ve got to set boundaries, you’ve got to set limits”.
James has been a pioneer in finding probability-weighted foreign exchange market trading strategies. She has launched products based on trading signals, which she explained as buying the trading rules that came from looking at historical data. Amidst the global turmoil of the 2008 financial crisis, these instruments performed better than many others.
She also coined the term rollercoaster bonds: long-term bonds that become highly sensitive to changes in interest rates, similar to the way rollercoasters must consider forces other than velocity and acceleration. Here, rising interest rates can significantly impact the value of century (100-year) bonds, like some sold by Oxford University. While century bonds sound reliable and safe, she showed they would lose much of their value if interest rates rose out of the near-zero range of the pre-COVID world – and they did.
Penning several financial maths texts is yet another achievement of James’ career. She is quick to warn, however, against getting her confused with an author of the same name who writes, apparently, racy novels as opposed to those about the stock market.
Talking to James, it is clear that she enjoys devoting her time to finance and academia. After all, she is a pension trustee at Citibank and Commerzbank, on the Institute of Physics council and a Visiting Professor at Oxford and University College London. However, reflecting on her time as an Oxford undergraduate, she reminisces on her fun side. She recalls her first encounter with Professor Kurti: a pioneer in the art of gastronomy. He was about to give a lecture at Manchester University titled The Joy of Cooking, but was startled to realise as he entered the lecture theatre that someone had amended the title on the chalk board to The Joy of Sex. James bumped into him years later in the Clarendon laboratory and confessed, luckily being met with laughter.
She notes the same Brasenose dinner between exams and results as one of her favourite memories of Oxford, where “everything was possible. Nobody’s wave function had collapsed”. Her message to students? Love every minute of Oxford for how fantastic it is. But also: “Take pride in yourself. Take pride in your accomplishments. You got here, you stuck it [out]. Not many people can do that.”
