Pay is still falling in high frequency trading - unless you're the boss
So much for making a fortune working for a high frequency trading firm. At the London operation of Sun Trading, the high frequency trading firm purchased by Hudson River in January 2018, pay fell last year. So did revenues. The only things to get bigger were the operating loss and compensation for the best paid manager.
Sun Trading International's results for the year ending December 2017 show it spending around $5m on wages and pensions for its 24 London staff, an average of $208k per head. One year previously, it paid 26 London staff an average of $233k per head. Tight times.
The pay squeeze was accompanied by a 42% fall in revenues to $23m and a more than tripling of the pre-tax loss to $7m. Even so, none of this prevented Sun Trading International's highest paid director taking home $663k in salaries and wages, compared to $323k the previous year.
While someone at Sun is clearly doing well amidst the carnage in the firm's profitability, pay at the firm compares poorly to that at most established hedge funds. Citadel, for example, paid its average London employee $712k last year. The implication is that high speed algorithmic trading alone is not the route to riches.
Of course, Sun Trading might be a special case. However, the high frequency trading sector as a whole has been beset by the dual difficulties of rising costs and falling volatility (leading to falling revenues) and. They were one reason why Hudson acquired Sun Trading in the first place. Hudson and Sun's has not been the only marriage of convenience in the sector - Virtu also acquired KCG Holdings and DRW Holdings acquired RGM Advisors. High frequency may be becoming a byword for (comparatively) low pay.
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