For years I believed algo trading (including HFT) roles pay some 10-30% higher than regular financial IT roles. Now I doubt it.
For the sake of argument, let’s say the market rate for a senior developer is 160k base + some bonus + some stocks.
- Factor: elitism and selectivity — buy-side algo trading jobs are notoriously hard to get. I tried about 10 places (Hudson River, Mako, SquarePoint, Gelber, DRW, Jump, TrexQuant, Susquehanna, WorldQuant, Millennium, 3-arrows…) Even if salary is higher, the chance of getting it is extremely low, at least for me.
- Factor: role expectation and workload — I don’t have experience working at buy-side algo trading shops, but i do have experience in other demanding teams. I didn’t do so well, so I know the risk of sky-high expectation is very real. So even if salary is higher, how long can we keep it?
- Factor: where is the intelligence — virtually all the algo-trading engineer roles I have seen emphasize low-latency rather than high-frequency. High-frequency is not really a job description for an engineer — developers optimize the low-latency system, to enable high frequency trading. The developers’ skill and intelligence required is substantial, but it’s not the same intelligence portrayed in mass media — which is trading algorithm or “alpha”. That intelligence is required only for the quants, the strategists, the portfolio managers, the traders… They are paid higher than most engineers. I guess some would say the engineers play a supporting role.
- Factor: architect level — the high salaries (say 30% above market rate) are often at the architect (or lead developer) level. At that level, a regular financial IT job also pays above market rate. If we compare salaries at architect level, then algo trading doesn’t pay such a big premium. Perhaps 10%? Actually I’m not an architect so this level is not really relevant. I’m more comfortable as a senior developer.
For a regular senior developer, I feel algo trading roles on sell-side pays no higher than average financial IT. I know it from multiple interviews (BNP, HSBC, Citi …)
For a regular senior developer on a buy-side algo-trading system, I guess it can pay 10-20% above market rate, up to 200k base (?), but I also know of many other financial IT jobs in the U.S. paying 180k to 200k base.
Update — SIG can pays 160k for mkt-data or SOR roles but too selective.
My tentative conclusion:
* algo-trading on sell-side doesn’t pay a premium
* algo-trading on buy-side is a high-end domain, but there are other high-end domains paying at a comparable level.