You want to be a top trader? Forget banks. Forget hedge funds. Try this
Where are the most exciting opportunities for trading professionals now? If senior traders' recent migration out of banks is anything to go by, they're not necessarily in other banks and they're not necessarily in hedge funds. They're in 'proprietary electronic trading venues'.
Why else did Zar Amrolia, the former co-head of Deutsche Bank's fixed income currencies and commodities business, resurface earlier this month as co-CEO of emerging electronic market making firm XTX Markets? And why else did ex-Goldman partner Jan Boomaars chose to come out of retirement and become chief executive of Optiver Europe?
Both men could have gone back into banking or become hedge fund big-shots. Both chose not to.
"We're seeing a lot of candidates leaving market making desks in investment banks and joining firms that specialise in electronic market making," says the head of the quant trading practice at one recruitment firm, speaking off the record. James Kennedy, head of the quant trading practice at recruitment firm NJF Holdings says the best traders are being lured, "with offers linked to P&L."
Recruiters say some electronic trading venues are offering the sorts of sign-on bonuses last seen in banks eight years ago. Salaries are typically a lot lower, but overall pay is typically a lot higher - and in cash rather than restricted stock: "I moved a candidate from a bank to an electronic trading venue and they went from a base salary of £120k ($186k) and a total package of £250k ($389k) to a base salary of £72k and a 28% cut of their profits," says one recruiter.
The good news is that the new venues are hiring. Alex Gerko, co-chief executive at XTX Markets and a former head of quantitative trading research at Deutsche Bank, tells us they've currently got 20 vacancies in London and are attracting people on the grounds that they're, "the only large electronic market maker with a head office in London".
Gerko set up XTX after spending six years as head of FX trading at 'hipsterish hedge fund' GSA Capital Partners. It's no coincidence, therefore, that XTX's trading hires since July have included ex-Deutsche and ex-GSA employees like Alexander Migita, an FX quant trader who spent four years at GSA and three years at Deutsche.
The bad news is that the new hires at the new trading venues aren't are all ex-traders from banks. Gerko says he's predominantly looking for, "software engineers and quants. We are open to all sort of backgrounds, experience in electronic trading in a bank can help but is not essential".
Another headhunter focused on electronic trading says market makers in investment banks shouldn't assume that a switch to electronic trading firms will come easily. So far, says Newman, expansionary trading firms have been busier hiring senior management from banks than topping up their ranks with lowly staff from banks' market making desks.
Meanwhile, banks themselves are boosting their electronic trading offerings. In July, Citigroup hired John Lowrey, former chief executive of Chi-X Global, as global head of cash electronic execution, and Goldman Sachs hired Ben Coward Talbot, former head of electronic trading product and global listed derivatives at Morgan Stanley. Deutsche is also rumoured to be in the process of hiring electronic trading talent from BofA. If you want to stay in banking, the opportunities are growing.
But if you do leave the desk to interview with an electronic trading firm, One recruiter says you need to be ready for a serious grilling. "These firms want to know that you can actually develop a strategy yourself. They don't want to hire someone who's been sitting there for five years implementing the strategy of their predecessor."