Graduate traders are earning salaries of as much as $400,000 straight out of school.
(Bloomberg) — Graduate traders are earning salaries of as much as $400,000 straight out of school.
But this isn’t New York, London or Hong Kong. It’s Sydney, where firms including Citadel Securities, IMC Trading BV and Optiver BV have established bases, hired rapidly and plan to employ even more. Elite recruits with math and science backgrounds can command up to that amount, people familiar with the matter said, asking not to be identified as the information is private.
Sydney has become an unlikely Asia-Pacific hub for tech-driven trading companies, a part of finance that’s bucking the global trend of layoffs and pay cuts. Observers say the city has attracted the high-paying roles thanks to a university system that churns out candidates who adapt well to the business, favorable tax policies and a long history in the trading industry.
“Trading firms offer extraordinary grad salaries,” said James Meade, head of employability at UNSW Sydney, one of the country’s top universities.
Citadel Securities, the US market maker founded by billionaire Ken Griffin, may increase staff in Australia by 50% to 100% over the next two years, according to Matt Culek, its chief operating officer. The company has more than 60 people in Sydney. Dutch rivals Optiver and IMC have also had big expansions in Australia and are planning to hire more staff, according to representatives for the region at the two firms.
“We are excited about the pipeline of talent that we’ve seen coming out of schools in Australia,” Culek said in an interview.
The hiring spree is focused more on becoming a hub for regional markets than building capability for Australia itself, with the timezone proximity allowing traders to cover Japan, South Korea and other large Asian markets.
The market-making industry is booming globally, and companies are recruiting outside Australia, too. And it’s possible to get similar salaries in some other markets. But what’s different is that some of the firms have made Sydney their Asia-Pacific hubs, home to most of their regional employees.
Optiver, which was founded in Amsterdam by trader Johann Kaemingk and two others in 1986, has most of its roughly 500 Asia-Pacific staff in the city. It has been hiring its biggest ever numbers of graduates and interns in the past few years, according to Tristan Thompson, head of trading for Asia-Pacific. Still, growth in the region is fastest outside of Australia, he said.
IMC, which was started in 1989 by two traders working on the floor of the Amsterdam Equity Options Exchange and employs more than 1,300 people, has been in Sydney since 2002 and now counts the city as its Asia-Pacific headquarters. Around 90% of its more than 300 employees in the region are based there. It’s planning to add about 60 graduates this year in trading and technology across Asia-Pacific, according to Matthew Benney, acting managing director for Asia-Pacific.
While Citadel Securities is boosting hiring in Sydney, Hong Kong remains its hub for Asia-Pacific.
Sydney traces its roots in the computer-driven trading business back to the 1990s, when Australia’s stock exchange had one of the biggest options markets in Asia-Pacific, which helped entice firms to the city. Tax breaks on offshore trading revenues, which are in the process of being phased out, also contributed.
Sydney is also a major forex trading hub, and Macquarie Group Ltd., which is based in the city, has a longstanding trading business that helped its profits hit a record last year.
The market-making companies have benefited from a flow of math, science and engineering graduates from the top universities, such as the University of Sydney, UNSW Sydney and the University of Melbourne. Traders say graduates hired from Australian schools excel at handling the kind of issues they face in the job.
And the city’s sunny weather, beautiful beaches and strong quality of life meant experienced traders were also happy to move there.
It “became a lifestyle thing,” said John Fildes, a capital markets veteran who now works for Bain & Co.
At Optiver, even the boss went surfing before work.
“My schedule was to get up quite early, be in the water around 6 a.m.,” said Paul Hilgers, who headed the trading firm’s business in Asia-Pacific from Sydney before a stint as Optiver’s global chief executive officer. He’s now an investor and consultant. “Go home and grab a coffee, get on my scooter and ride over to the office. I still miss it.”
Privately held market-making firms have been expanding quickly in their business of offering prices for thousands of securities to keep trades flowing on exchanges. Citadel Securities had revenue of $7.5 billion in its last financial year, more than listed investment bank Jefferies Financial Group Inc., even though it has less than a third of the employees. Citadel separately runs a hedge fund business.
In early December, Griffin flew 10,000 Citadel employees and their families — from New York, San Francisco, Paris, Zurich and other cities — to Walt Disney World for three days to celebrate the banner year and Citadel Securities’ 20-year anniversary.
Only a small fraction of graduates start on $400,000 salaries, and some of the market-makers don’t pay that much. Wall Street banks, meanwhile, offer base wages of around $100,000 to $120,000 for an analyst, according to data from Wall Street Oasis, a website that tracks finance compensation.
Across Wall Street, bleak expectations for banker bonuses are proving true, as a slump in dealmaking ends the industry’s war for talent and firms regain the upper hand in setting pay. Companies including Goldman Sachs Group Inc. and Citigroup Inc. are cutting staff. Tech giants including Amazon.com Inc. and Microsoft Corp. are also eliminating thousands of jobs.
Optiver pays as much as A$250,000 ($165,000) plus bonus to a fresh quant researcher, according to jobs website Prosple. Most graduate programs at trading firms in the city give salaries of more than A$200,000, according to Meade from UNSW Sydney.
At Optiver, perks include in-house chefs cooking free food, massages and gym memberships. IMC added an in-house kitchen and a barista team from this year.
The relaxed dress code is also part of the appeal. At IMC, employees come to work wearing sandals and t-shirts, and even the managing director sometimes wears one of the firm’s branded hoodies in the winter, according to Melissa Banek, the APAC head of HR.
Will Green, 26, who graduated in electrical engineering from UNSW Sydney in 2019, completed an internship at Optiver while still doing his degree and was offered a position once he finished. He says many people in Australia don’t really understand what he does, sometimes confusing him with tradesmen, who are known as “tradies” in the country. But he said the job is fast-paced and exciting.
“It’s significantly better than a Wall Street bank,” he said. “The hours are there, but the work is quite enjoyable.”
While Sydney is booming in market-making, it lags behind other parts of Asia as a financial hub. It ranked 13th in the latest Global Financial Centres Index. Singapore and Hong Kong were third and fourth, respectively.
But Culek of Citadel Securities says the city is on the rise.
“Sydney is being viewed globally as a fantastic place to live and grow and build a career,” he said.
–With assistance from Harry Brumpton, Adam Haigh and Alyssa McDonald.
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