Fifty Years of Black-Scholes and the Quant Revolution: A Viewpoint

Abstract

As the world of quantitative finance celebrates fifty years of the seminal work of Black-Scholes, I take an overview of how this area has emerged in terms of reach, applicability and sophistication, and provide my take on the way forward. Black-Scholes had laid the foundation of pricing and risk management practices which has driven the unprecedented innovation in the financial markets, over the last five decades, which I discuss in the first half of this article. In the second half of the article, I present forth my views in what would constitute the thrust areas of research and innovation in financial engineering in the near future, identifying and dwelling upon high-frequency trading, sustainable finance and FinTech.