Home to the headquarters of Google, Facebook and hundreds of other thriving tech companies, Silicon Valley remains the biggest magnate for aspiring engineers. New York was briefly coined “Silicon Valley 2.0” by some after Amazon pledged the creation of 25k high-paying jobs, but that moniker was quickly removed after the e-commerce giant pulled out of the deal just weeks after it was announced. Seattle, too, is a burgeoning tech hub, though Amazon’s headquarters is the main reason. Perhaps young engineers should ignore the coasts and look to Chicago, especially if you’re motivated by money.
Once the epicenter of derivatives and options trading in the U.S., Chicago has seen thousands of human traders lose their jobs in recent years amid the ongoing shift to electronic trading. But while J.P. Morgan and Goldman Sachs pull away from Chicago, private prop trading firms and quant-focused hedge funds have collectively taken their place as the top-paying employers in the city. And it’s engineers that they want.
Fresh computer science (CS) graduates who self-reported offers they’ve recently received on a huge Reddit forum show how generous Chicago-based firms are willing to be. The average starting salary at local hedge funds and trading firms for CS grads was roughly $140k, well above what they pay entry-level engineers at Google, Facebook and Amazon (around $110k-$115k). The average signing bonus was $81k, though two engineers who took positions with a hedge fund received $150k to go along with their $150k in salary and an annual bonus of $100k. That’s $400k in first-year annual compensation for recent undergrads.
After seeing some numbers from others, one software engineer who took a job at an unknown Chicago trading firm bemoaned that they should have negotiated harder for their signing bonus of “only” $45k. “I guess I’ll cry about it in my future Porsche 911,” they wrote.
While the weather in the Windy City pales in comparison to that in California, plenty of blue-chip computer science recruits have started eyeing Chicago, with one current Google employee calling it "one of the more sought-after destinations" for engineers who want to work in finance without losing the startup culture. As of late last year, nearly 30 Google and Facebook alumni worked at Chicago high-frequency trading firm Jump Trading, with the vast majority having interned at the tech firms or worked full-time for a short period of time. Fellow Chicago prop trading 3Red is said to have a ping pong table and hosts after-hours trivia and poker events; both have ultra-modern offices reminiscent of Silicon Valley. Wall Street Oasis says that a research associate at Jump’s Chicago headquarters can make $150k base plus a bonus of up to $75k, backing up the aforementioned numbers.
Chicago is also home to hedge fund giant Citadel and rival Balyasny Asset Management, both of which operate multiple strategies but have increased their reliance on quants over the years. Citadel was recently ranked as the top-paying hedge fund in the industry. Balyasny finished 13th, ahead of a host of other big names. And while Chicago is not cheap, the cost of living is way lower than in Silicon Valley and New York.
The one thing about the current engineer-focused Chicago trading scene is that it is rather secretive. Unlike two decades ago when rowdy traders stood shoulder-to-shoulder in pits, high-frequency trading firms that don’t require outside money are typically housed in nondescript buildings and go out of their way to steer clear of any attention. Any mention of their names in the press is usually uninitiated. And unlike large stable tech companies, high-frequency trading firms that rely on market conditions aren’t always in growth mode.
“I think it can take a little while getting used to the fact that the ‘product’ you’re building has no outside purpose” other than generating returns “that you can’t even talk about,” said one buy-side quant. “Most of us who decided to become engineers probably envisioned something more creative.” As is usually the case, huge pay packages can often settle much doubt.
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