Jane Street's structure is a warning to traders everywhere
If you're a trader who's worried about losing your job to 'electronification' and to people who actually know how to code, then the staffing structure at electronic trading firm Jane Street might come as a bit of a shock.
For anyone unfamiliar with the name, Jane Street is one of those pure electronic trading firms that's coming to eat banks' lunch (and breakfast and dinner). The company trades an average of $13bn of equities daily from its offices in New York, London and Amsterdam. Historically strong in the ETF sector, it's encroaching upon banks' core businesses like corporate bond market making. In April this year Jane Street was trading around $550m worth of corporate bonds in the U.S daily. That was five times higher than in 2017.
Traditional traders will want to work for Jane Street: it's the kind of lean, mean set-up that's less likely to make them redundant than a major bank with a major cost problem, but it probably won't have them. Quants all want to work for Jane Street: it's a market-maker that uses proprietary algorithms to create liquidity in 'even the most complicated products' and their work there is uninterrupted by the old-school sales traders who hang around banks. Technologists want to work for Jane Street too: the firm describes itself, "as much a technology company as a trading firm;" entire subReddits are devoted to working for Jane Street or working for Google.
Most people don't get to work for Jane Street though. The company doesn't release its global accounts, but its recently filed accounts for Jane Street Financial Limited in the UK reflect how much an electronic market maker like this can achieve with very, very few people.
In the year ending December 2019, Jane Street Financial Limited increased revenues 212% to $337m and raised profits 205% to $122m. In doing so, it achieved an operating margin of 46% and a 'return on capital deployed' of 104%. It did this with 195 people, only 52 of whom were in the front office.
70% of Jane Street's staff are in the back office. Jane Street doesn't specify what they do there, but the suspicion is that most of them work in technology. The back office is also where most of Jane Street's hiring is in the UK - it recruited 35 new back office people last year and just seven in the front office.
If you want to be a quant trader or a quant researcher at Jane Street, basically, the best of good luck.
How much does Jane Street pay?
Unsurprisingly given those margins, Jane Street is generous to the staff it lets through its door. Last year, average pay in the UK office was $630k (£516k) each. In the U.S., the HIB visa database indicates that Jane Street offers experienced software engineers and experienced traders similar salaries of $200k, with bonuses supplementary to that.
It's good work if you can get it. But not many can, and this is one reason Jane Street's margins are so huge.
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