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Are banks’ algorithmic traders underpaid?

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.

Comments (10)

  1. If you say algo trading is a technology problem then you can get people in technology to do the work. You can pay them less because they work in technology and not the business side.

    Algo Trader (in ‘Technology’) Reply
  2. Sarah Butcher and her obsession with Goldman Sachs. I get the feeling she secretly aspires to work there or perhaps did. Hence the continual references and then jokes and articles.

    So, this is what people mean by media bias……………

  3. Sarah is AGM right?

  4. goldman doesn’t pay that well for the vast majority of positions. they think you are willing to take a pay cut because “it’s goldmans”

  5. Is Sarah Butcher the new Goldman Sachs?

  6. SB: “Aleynikov’s arrest is also likely to put anyone else off leaving”

    or joining for that matter which is the real challenge…..

  7. Sarah, we await your comment on the alleged bias towards Goldmans….

  8. This article is irrelevant because Serge was not an algorithmic trader.

    He was a programmer. Programmers simply help to implement the strategies developed by the quants/traders. Or develop the platforms upon which those strategies are traded.

    Goldman are not going to pay one of their programmer $1.2mln.

  9. The real question here is surely what this will mean for Algo / HFT generally. Goldmans claim that the system he took would enable someone who knew how to use it to “manipulate markets”. This comment could lead to significant investigations into whether this system therefore allows Goldmans to manipulate markets.

  10. I am not AGM. Nor have I ever worked at Goldman Sachs or consciously aspire to work there. Subconsciously, however, I may possibly be camped outside 133 Fleet Street every night.

    Sarah, Editor, eFinancialCareers Reply

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