Financial News has an article today suggesting there are jobs on offer at high frequency trading firms.
“Getco, Tower Research Capital-owned Spire Europe and US proprietary firm Sun Trading are ramping up their trading teams,” it claims.
This would appear to be true. Our own research among the leading high frequency trading firms confirms that they are indeed recruiting in Europe, albeit not necessarily in London. Hence International Algorithmic Trading has various vacancies in Frankfurt, Flow Traders has openings for junior traders and developers in Amsterdam, Optiver is looking for 10 IT professionals and three traders in Amsterdam and DRW is after a trader and an analyst in London.
There are various reasons why you might want to work for a high frequency trading firm.
Not only are they hiring, but they also pay well. As we mentioned last year, Getco Europe generates revenues per head that are five times higher than Goldman Sachs International. This filters through to employees: last year, compensation at Getco Europe averaged $1.5m per head.
Even more excitingly, recruiters say deferred bonuses are almost unheard of in the high frequency trading universe and that houses pay employees a fixed share of profits.
“High frequency trading houses will often give an equity stake and a cut of the profits,” says Cian Loughnane at high frequency trading recruiter Nicoll Curtin.
“We’ve seen people [working in high frequency trading] getting paid 40-50% of their profits,” says Hugo Sugden at recruitment firm GQR Global Markets. “It’s rarely deferred.”
You will, unfortunately, be lucky
So, what are the prospects for moving into a high frequency trading role?
Low – especially if you haven’t worked in the industry before.
A quick look at the current London-based employees of Getco or Tibra reveals that very few have banking backgrounds. For example, Getco has 20 employees registered with the FSA in London, but only two came from banks (JP Morgan and HSBC). Tibra recently hired Justin Van Wijngaarden, the former CFO and COO of Jefferies in Europe. On the whole however, staff appear to be grown in-house.
Allston Trading has a good description of the algorithmic trading and development roles on offer at high frequency trading firms, and what’s required in order to occupy them. Recruiters say there’s usually little overlap between traditional bank traders and developers and those who work in the HFT world.
“You need a very high level of technological nouse,” says Loughnane. “Technology roles in HFT firms are only open to the top 2% of technologists in investment banks. They’re taken by people who could be traders in another world, but who have chosen to focus on the technology instead.”
“Infrastructure roles in HFT are filled by C++ gurus,” says Sugden. “It’s a different skillset to the desk developers in investment banks who are just debugging analytics libraries.”
Sugden points out that there are also few overlaps between the average ‘discretionary trader’ working on a derivatives desk in an investment bank and the average HFT professional. “People in high frequency trading often have a very statistical approach. They will have qualifications in advanced financial mathematics and statistics and will be familiar with data mining and regression analysis. They have PhDs in artificial intelligence and machine learning,” he says, adding, “On a discretionary desk, people might have a Masters in maths or economics.”
The easiest way to move into high frequency trading is therefore to do so in-house. Banks like Nomura, BarCap, UBS and Deutsche already have well developed high frequency trading operations. However, finding a job in a bank may prove challenging as many have pulled back from developing their HFT capabilities. “A lot of banks are waiting to see the implications of forthcoming MiFID guidelines before investing more in this area,” says Marcus Newman at
search firm Riversdale Consulting.
Growth in HFT is therefore unlikely to prove a panacea to job cuts across banks – unless those who are let go are prepared to invest long years in acquiring a PhD in machine learning, by which time the HFT industry may have been squashed by regulation anyway.