Following the arrest of Serge(y) Aleynikov after his alleged robbery of algorithmic trading codes from Goldman Sachs, algorithmic traders contemplating pilfering a section of code from Goldman (or any other bank) are likely to think twice.
But assuming Aleynikov really did steal code rather than simply download a few programmes to work at home as he claims, why would an algorithmic trading type want to risk his/her career in the first place? According to the Reuters journalist who wrote the original article it might be because they’re not paid enough.
Bloomberg would seem to confirm this. It reported yesterday that 39 year old Aleynikov was earning $400k at Goldman, and planned to triple this by moving to hedge fund Teza Technologies.
Recruiters say Goldman has lost several of its algorithmic traders as result of bonus issues. “The common thread in all the ex-Goldman algo traders we talk to is that they have only got a fraction of the bonus they expected from the profits they generated,” says Dominic Connor at P&D Quant Recruitment.
“Senior algo traders have an incentive to move to hedge funds where they can get a percentage deal instead of a discretionary bonus,” says another recruiter.
Goldman Sachs declined to comment on claims of other algorithmic trader departures.
However, allegations of modest pay don’t sit well with algo traders’ importance. Rochdale Research analyst Dick Bove released a research note yesterday attributing Goldman’s success to its trading systems, and claiming that the bank now employs more IT staff than traders or investment bankers.
Now that Aleynikov has highlighted algo traders’ significance, maybe their pay will rise in order to buy their loyalty. Alternatively, maybe algo traders will now be loyal anyway - Aleynikov's arrest is also likely to put anyone else off leaving.