How much do you earn working in a high frequency trading firm? Millions, as the popular press would have you believe, or ‘mere’ hundreds of thousands providing that you bring in the PnL? If the accounts of Spire Europe, one of the largest HFTs in the UK, are anything to go by, it’s the latter.
Spire Europe has just released its 2013 accounts on Companies House in the UK and it’s been a year of expansion for the firm, despite the reduced volatility in the markets hitting the firm’s bottom line. It hired 11 new trading staff throughout the year (and four in support/management positions) and compensation costs increased from £2.9m in 2012 to £19.9m last year – a rise of £17m.
This increase is more likely to be down to an increase in headcount than improved performance among existing staff. Trading profit was £59.9m in 2013, down from £72.9m in the prior 12 months and a hefty increase in ‘administrative expenses’ to £22.2m ensured that overall profits slipped to £2.8m from £23.7m a year earlier.
On a per head basis (including its directors and support staff), Spire paid an average of £582k, which is a similar figure to rival Jump Trading, which paid an average of £550k for its UK-based employees last year. Technical roles in HFT reportedly pay £172k after two years’ experience and rise rapidly thereafter.
Spire took advantage of a rival’s misfortune last year by making a string of new hires from defunct HFT firm, Eladian Partners. Yunus Saatchi, a former quant trader at the firm, joined Spire Europe as a portfolio manager in January 2013 and brought Anthony Vince, Paul Bermingham and Robert Howard across with him.
So far this year, it has also made some significant hires, bringing in Kunal Khanna, European head of equities at Getco, in May along with Martin Vu.
These new recruits suggest that HFT firms tend to hire from their competitors, rather than – as some recruiters have suggested – from the quant desks of investment banks.
Trading profit in the UK (Spire’s largest market) slipped from £48.6m in 2012 to £28.7m last year, while profits improved in Asia (£2.6m) and Europe excluding the UK (£19.8m), but fell from £9.7m to £8.6m for its Americas operation.
Spire said that “reduced market volumes and low volatility impacted our top line revenues” despite improvement in the second half of 2013.