IT developers at investment banks are nearly doubling their pay by moving to a new wave of hedge fund start-ups, says technology staffing firm ReThink Recruitment.
ReThink Recruitment said that it has recently placed IT professionals with hedge funds on a £80,000-£100,000 basic salary plus a 100% guaranteed bonus – almost twice their previous level of remuneration.
ReThink said that this level of compensation is increasingly common among start-up hedge funds. According to the company, the pressure on banks to limit and defer bonuses and pay only a small percentage in cash is allowing hedge fund start-ups to poach key IT staff from the banking sector.
The firm also says senior-level IT developers, such as chief technology officers, lead algorithmic developers and technical architects, are now being offered equity in start-up funds. Traditionally, start-up hedge funds have only provided equity to front-office staff.
The value of this equity can boost total compensation packages by six-figure sums.
Fhamid Malik, head of financial services at ReThink Recruitment, said, “There has been a flurry of new hedge funds starting up in London. IT infrastructure is critical to how these funds trade, so they are prepared to pay a premium for the right IT skills.”
He said, “Banks have their hands tied over bonuses, which is allowing this new breed of hedge fund to poach key IT staff. IT is critical to competitive advantage in the financial services industry, so banks will need to find innovative ways to retain staff if they are to compete in this escalating arms race.”
According to ReThink, the continued development of "quant" funds, which trade according to computer programmes using historical data, is leading to IT developers taking over dealers’ jobs.
“The trading process of many of these funds is now so IT-dependent, that they are increasingly taking the leading role. The rationale behind this is that the designers of these computer models understand the systems much better than old-school dealers and so are better placed to manage the fund,” said Malik.
Last year, the same recruitment firm said bonuses for hedge fund IT staff had doubled in a year, in spite of the initial impact felt from the economic crisis.
Hedge fund IT staff could now expect 50 percent-plus bonuses, which was around double the 25–30 percent they received the previous year, according to data compiled by ReThink.