If you’re a quant trader or financial services technologist nowadays, you will probably have heard of Jane Street. You will probably also want to work there. Many try. Few succeed: the company says only a “small percentage” of applicants are accepted for interview and that its notoriously difficult interview questions get harder with each round.
For those not in the know, Jane Street is about as hot as things get in the world of quant trading. The New York Times describes it as a “secretive E.T.F. trading firm that, after years of minting money in the shadows of Wall Street, is now pitching itself to some of the largest institutional investors in the world.”
Jane Street describes itself a little differently as, “a global liquidity provider specializing in equities ETFs and options.” Its business comprises three divisions: risk-free agency trading where it matches buyers and sellers, proprietary trading where it takes risk itself, and investment management. The company trades more than $1.7 trillion a year, has two floors of a low key office building in Manhattan, one floor of a building in Fenchurch Street London, and an office in central Hong Kong.
Because Jane Street isn’t a public company, no one knows exactly how much it pays people globally. Thanks, however, to the vagaries of British bureaucracy, Jane Street is required to file accounts with Companies House in the UK. The most recent were filed last October and are for the year ending December 2016. Even so, they’re pretty illuminating.
Firstly, while banks like Deutsche struggle to achieve even a 2% return on equity, the return on equity at Jane Street Financial (which includes all the company’s agency and prop trading activities in the UK) was 16% in 2016. These are the kinds of returns banks have only been able to dream of since the financial crisis.
Secondly, profit margins at Jane Street are correspondingly healthy. While costs consumed 90% of revenues at Deutsche Bank last year, 40% of Jane Street Financial’s revenues were profit in 2016. The firm’s 124 employees generated P&L of $37m.
This translates to a fairly healthy level of pay – although nothing that would quite shoot the lights out at a hedge fund. The highest paid director at Jane Street Financial earned $2.6m in 2016, down from $4.9m the year before. Excluding social security payments, Jane Street paid its 124 UK employees (of whom 76 were in the back office, 41 were in the front and 7 were management) $30m for 2016. That works out at $243k (£171k) per head.
So, Jane Street certainly pays well – but it also pays less than Facebook and a lot less than Goldman Sachs. Still want to work there? Be ready for some “ridiculously hard” interview questions, assuming you even make it that far.
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