XTX Markets is the future. With capital-constrained banks less aggressive than in the past, non-bank electronic market makers like XTX are seizing their moment. In the 2018 Euromoney FX survey, XTX jumped from 12th to 3rd place with a market share of over 7% for global FX trading. The company is pushing into Asia and is well known for its fancy office at London's King's Cross.
If you work for XTX Markets in London you'll therefore work for a company that's on the up. You'll also get to eat your lunch in a replica Apollo 11 landing capsule and to sleep in the office if want. But will you get paid? The answer is yes, but not as much as you might think.
As an electronic trading company, XTX doesn't employ legions of traders. Nor does it employ many human beings at all. The most recent accounts released for XTX Markets Ltd for the year to December 2017, indicate that there are just 47 staff in London, up from 43 last year. Together, these 47 made £155m in revenues and £61m in profits for 2017, a profit margin of nearly 40%.
However, XTX isn't exactly generous when it comes to sharing this money around staff. While Goldman Sachs was lambasted last week for cutting the proportion of revenues it pays in compensation to just 37%, the compensation ratio at XTX is just 7%. Last year, the company paid £11.5m of its £155m revenues to employees.
The result was that average compensation per head at XTX was £244k ($320k) last year. Although this is more than most London salaries, it's less than the $523k average at Goldman Sachs International. It's also less than the pay at quite a few large London hedge funds. Nor does XTX pay entirely in cash: the company operates a three year deferral like most big banks.
Why doesn't XTX pay more? It probably doesn't help that 44 of its 47 staff are deemed "support staff", with just three (Alex Gerko and Zar Amrolia, the co-chief executives and Niki Beatti, the non-executive chairman) deemed directors. But even the directors aren't making millions - the highest paid received £400k for both 2016 and 2017.
Instead of rewarding its staff XTX seems to be investing in organic expansion. The XTX Group is pushing into new geographical markets and the UK entity helped fund the rest of the group with a £22m dividend last year. The UK company also paid significant amounts in operating leases, depreciation and 'strategic advisory fees.' Staff were one of many priorities.
XTX's results could therefore spell bad news for technologists who hope to get paid like traders as algorithms take over. The implication is that they won't be: they will be paid like very well compensated technologists. The new breed of technologists could soon be better off than traders, though: under XTX's model, traders' skills aren't needed at all.
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