Pity the programmers toiling away at Wall Street's secretive high-frequency trading shops--places like
Now some programmers feel used and are instigating a revolt.
They are doing so by striking out on their own or forming profit-sharing arrangements. Jeffrey Gomberg, 32, worked for a trading firm that paid him a low-six-figure income after four years on the job. His trader colleagues, by contrast, made millions manipulating the algorithms he'd written.
Last year Gomberg and a fellow programmer quit their jobs and cut a deal with HTG Capital Partners of Chicago, whose programmers typically trade on regulated futures exchanges. HTG supplies office space, technology and access to exchanges. Gomberg keeps 40% to 80% of net profits, with the percentage rising as his profits do. More importantly, says Gomberg, the programmers retain ownership of the code they write.
“We designed this deal so we wouldn't lose intellectual property,” he says. “If it doesn't work out, we can go somewhere else and take all the software [that we developed]. That's really the key.”
HTG's owner, Christopher Hehmeyer, says he gets three to five inquiries a week from high-frequency programmers looking for better gigs. Many callers are immigrants or were hired out of college for $80,000 to $150,000 a year. If a programmer brings money with him, and puts up at least $250,000 to become an HTG partner, Hehmeyer hikes his percentage of the take.
Another high-frequency programmer, who spoke on condition that his name not be used, quit two firms that he believed were underpaying him. He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year.
The programmer's bosses offered him an office and a $45,000 raise, but he left instead. He found a partner, and together they began trading on their own. The programmer now pockets more than half of any profits his software generates. The programmer says he's making about the same money he did at the job he left. But at his old job he'd topped out in pay while now he says the sky's the limit.
“I'm on my way to making a ton,” he says.
No question a programmer can earn millions off a top high-frequency program. Last summer, a programmer named Sergey Aleynikov left Goldman Sachs for a newly formed Chicago trading company called Teza Technologies. In February U.S. prosecutors indicted Aleynikov for allegedly stealing hundreds of thousands of lines of source code from Goldman's high-speed trading platform as part of a move from a $400,000 job to a $1 million one.
Aleynikov has pleaded not guilty. His trial is scheduled for November.
As programmers have become more demanding, some shops are fighting harder to keep top talent. Some companies are offering total compensation of $200,000 a year or more.
On Wall Street, of course, that hardly ranks as bulge-bracket pay. As programmers start taking on the risks that some traders have long assumed, however, they will no doubt discover that it's just as easy to lose money as to make it. When they do, the security of their old, relatively low-paying gigs might start to look pretty good.
