Jane Street pays people $1.4m each but maybe they're owed more?
Jane Street and other electronic trading firms are in a similar position to that of investment banks prior to the 2008 financial crisis; mysterious to anyone outside of finance, but with a cult following and a reputation for paying very, very well.
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As we noted last week, Jane Street paid an average of $1.4m to each of its 2,960 people last year. This is generous, but the FT reported that the firm spent $4.1bn in total on its staff and earned $20.5bn in revenues, meaning that just 20% of Jane Street's revenues went to compensation.
That's not much considering Jane Street's reputation as "a bit of communist" place to work. Pay there is reportedly allocated according to the performance of the firm rather than the performance of individuals.
Investment banks prior to the financial crisis were notably more communist in their approach: Goldman Sachs spent 47.1% of its revenues paying people in 2005, a proportion that has since shrivelled to 15.7% in the most recent quarter.
If Jane Street isn't spending its money paying its people, what is it spending its money on? Technology is the predictable answer. The firm has amassed a fleet of over 5,000 powerful GPUs and consumes tens of terabytes of data per day, which would require very costly datacenters. Bloomberg says technologists (who typically earn less than traders) account for 37% of Jane Street's headcount.
Could Jane Street's employees squeeze a bit more out of their employer? Maybe. London based electronic trading firm Quadrature generated £588m ($787m) in turnover for the year ended January 31st 2024 according to Companies House accounts, and spent £408m on staff costs. Quadrature staff were therefore paid 69% of revenues. The firm is still small in terms of headcount though, and has no explicit job openings, whereas Jane Street has 144 global vacancies and is expanding. Take your pick.
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