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Businesses Programming The Almighty Buck

High-Frequency Programmers Revolt Over Pay 1018

Posted by kdawson
from the crying-all-the-way dept.
An anonymous reader writes "Programmers who design and code algorithms for investment banking are unhappy with their salaries. Many of them receive a low 6-figure salary whereas their bosses — who manipulate these algorithms and execute the trades — often earn millions. One such anonymous programmer points out that he was paid $150,000 per year, whereas the software he wrote was generating $100,000 per day."
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High-Frequency Programmers Revolt Over Pay

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  • Accountability (Score:5, Interesting)

    by phorm (591458) on Friday July 30, 2010 @09:50AM (#33081986) Journal

    "One such anonymous programmer points out that he was paid $150,000 per year, whereas the software he wrote was generating $100,000 per day."

    And if said software screws up and costs a few hundred million, or otherwise causes other "bad things" to happen, what's the accountability of the programmer or the manager?

  • by Ihlosi (895663) on Friday July 30, 2010 @09:50AM (#33081988)
    He can have mine, where he'll write code that helps save lives everyday, for less than six figures.
  • Re:Accountability (Score:5, Interesting)

    by Anonymous Coward on Friday July 30, 2010 @10:02AM (#33082188)

    I know guys in that sector... What happens is, whoever they can pin it on gets fired immediately for cause (no unemployment), with the cause being gross incompetence. This, combined with his I.P, noncompete and nondisclosure agreements makes him unemployable in his sector (and possibly all of New York, which upholds such agreements for up to 5 years).

    There's accountability. It's called "career death".

  • by Anonymous Coward on Friday July 30, 2010 @10:08AM (#33082302)

    I second this one. I work in industrial controls and automation, writing software that controls huge, expensive machines and process plants. Programming for PLCs is usually a one-man job, so I am responsible for the majority of the controls working correctly, and failures will most certainly result in my ass being punished in some way. Most of the machines I have written control software for carry the risk of causing major injury or death. I have never made over 68K/yr doing this job, nor have most of the other controls programmers I know.

  • Re:Good news (Score:2, Interesting)

    by phatslaab (1046786) on Friday July 30, 2010 @10:11AM (#33082342)
    Hmmmm...getting paid more or less depending on the app they write.

    For instance, if I create an app that makes $5000 a day and another programmer creates an app that makes $100,000, who should really get paid more?

    What if the same amount of work was needed for both? Both written using the same language? Should one receive higher wages because his app does something the other doesn't?

    They are both receiving their contracted wage, so what's the complaint? If you want to make the big bucks, change professions and become a trader. You are receiving programmer wages....you programmer!!
  • by twostix (1277166) on Friday July 30, 2010 @10:12AM (#33082352)

    $60000??

    My brother in law drives a coal truck and is on $140000 a year for four days a week work (12 hour shifts).

    His meals and accommodation are paid for and he's flown there and home once a fortnight.

    Not bad for someone who would be regarded as white trash by most (uneducated, four kids didn't, finish high school and yet earns more then most college graduates)...

    I'm starting to think in my old age that Uni / College is for the most part the 21st century version of indentured servitude.

  • by Anonymous Coward on Friday July 30, 2010 @10:20AM (#33082458)

    I was a programmer for one of the companies mentioned in TFA; you've heard of them. The algorithms they're talking about are not really developed by the programmers, they're typically invented by the phalanx of PhD mathematicians the company also employs; the programmer's job is to implement it in the most efficient way possible.

    Day one I was handed a paper on Eigen-related trading, straight out of TeX and was told to implement it. I admit that I had to go to the bookstore at lunch just to figure out what some of the symbols were. What I had two weeks later was a working version in C++ that did the job; over the course of a few months I refactored and refactored it to run faster; no object copying (everything using references), bit shifting, you name it, I used it. The code was tight and ran fast; as far as I know it's still being used.

    I see it more as being a waiter; you may be the "face" of the restaurant, delivering the meal, but your tips also go back to the cooks, busboys, etc. I helped out on another project where, to this day, I *still* don't get how it works, yet the code too runs fast and correctly, as far as I know.

    It should also be noted that the pay might be good, but the life is horrible; if you're young and single it's definitely something to go for, but save your money because there will come a time when you just can't do 100 hour weeks, week after week after week for years and years.

    The only memory I really have of my 20s and early 30s is the glow of a screen.

  • Re:Simple solution. (Score:4, Interesting)

    by GPLDAN (732269) on Friday July 30, 2010 @10:23AM (#33082492)
    The REAL Option Three: Understand that the managers are capital and you are labor, and start a union, and force a wage scale onto them.


    It says everything I need to know about Slashdot that nobody has said this yet.
  • by Chris Burke (6130) on Friday July 30, 2010 @10:29AM (#33082574) Homepage

    If they are making too much, they are sucking a lot of money out of the system.

    Welcome to reality. Especially the reality of trading and finance.

    If this blood-sucking is stopped on its tracks, the overall economy will be more efficient. Out with those fucking leaches!

    Agreed, though honestly, good luck with that.

    But that still leaves me with no sympathy for a programmer earning a mere six figures.

  • by bberens (965711) on Friday July 30, 2010 @10:30AM (#33082592)
    $150k in NY City is akin to about $90-100k elsewhere. A good salary to be sure, but imho doesn't account for the high pressure/risk of the job at hand. The tiniest bug and people can lose Billions of dollars.
  • by ZeroExistenZ (721849) on Friday July 30, 2010 @10:31AM (#33082604)

    Maybe they are excellent programmers, but bad business men. It doesn't mean they deserve to have their blood sucked from them.

    I used to write stockmarket software for a global supplier. Nice stuff, through this software ran billions a day, direct feed to the stockmarket-floor.

    Now I work as a consultant for a consultancy firm, to get this contract they had a "fixed entermediate consultancy firm", who took 10% profit on my price just to put me into the company. (under their labels and what not)

    So I filled in timesheets for my employers, the intermediate party and for the client. It wasn't very clear why I was filling in timesheets for the client as well, but it turned out my work was billed to their clients billing my work per hour with a factor of 2.5 on my price because they could.

    This effectively resulted in me working hard, virtually for free, and generating profit for 4 companies (employer, intermediator, client, clients' client) while my pay was insulting for the work I've put out (under 8% of the cash my work generated).

    If you want to keep your devs productive and happy, you should spoil them a bit and they'll put out. But I know alot with the same sentiments and effectively migrating to management hoping they'll make their big bucks, often resulting in incompetent management.

  • Re:Boo Effin Hoo (Score:4, Interesting)

    by WCguru42 (1268530) on Friday July 30, 2010 @10:32AM (#33082630)

    And it ain't exactly the poor house either. People have this idea that things are so expensive in the big cities (New York, Chicago, San Francisco, etc.) but that really only applies to housing. $150k in New York is probably matched by $80-100k elsewhere in the states.

  • by Daddy-Oh (306170) on Friday July 30, 2010 @10:34AM (#33082642)

    Hmmm. I call bullshit. As a consultant at a small technical consultancy, I can't tell you how many times some so-called-risk-taking-good-businessman type has asked us to completely bare the full burden of risk by building applications to run their not-so-great business plans - for free.

    That might be genius on their part in a business sense, but don't give me that crap that they are risk-takers. The only risk was getting rejected. Waaaaah to that.

  • by turbidostato (878842) on Friday July 30, 2010 @10:34AM (#33082648)

    "Sure, if the business goes bust upper management loses their jobs, but then so do the programmers."

    And even then, management will have better compensation, if not golden parachutes.

  • Re:Simple solution. (Score:3, Interesting)

    by dkleinsc (563838) on Friday July 30, 2010 @10:39AM (#33082732) Homepage

    We have a winner!

    If you're already at the point where you'd be fine with quitting, consider organizing a union instead. Worst that can happen is that they can look for some excuse to fire you (in violation of a bunch of federal and state labor laws), and you were planning on leaving anyways. Now, I know that this goes against a lot of folk's libertarian ideals, but unions can dramatically improve the working environment for their members.

    The other factor here is that when programmers complain a lot about salaries, that usually means they're being treated poorly in other ways. If I'm getting $100K and working 40 hours a week in a comfortable office with free lunches and snacks and smart colleagues and reasonable project requirements, I'm not likely to start agitating for more pay (In part that's because that pay scale is well above the median for a programmer in my area). If, on the other hand, I'm required to work 60-80 hours a week in a cellar with no bonuses or overtime or perks, I'm not so happy about the $100K.

  • by turbidostato (878842) on Friday July 30, 2010 @10:43AM (#33082792)

    "He deserves no more than he agreed to when he started employment."

    Only if:
      * He was a properly informed agent when he entered the deal
      * Environment for the agreement hasn't changed

    "You can't complain about a salary that YOU agreed to."

    Of course you can (you always can do it). You can even *ethically* do it if you were tricked into an unballanced deal.

  • by MaWeiTao (908546) on Friday July 30, 2010 @10:44AM (#33082812)

    Here we have a bunch of jerks whining about the 6-figure salaries they earn. I wish I were earning what these guys earn. If they have a problem they can go find a job elsewhere. Or do what everyone else has to do, rise through the ranks of the company and get promoted to the point where you're earning the kind of salary you want to see.

    While I agree it's quite insane what some in management are earning they also have the responsibility of the entire company on their shoulders. I have a friend who's a programmer at a billion dollar firm that does business related with the stock market and the upper management is comprised of middle aged guys who's entire life is work. The majority are single or divorced and don't even have time for a girlfriend. But anyway, my point is that pay isn't based on what management is earning. It's based on your perceived value to the company. There are probably countless other programmers lined up behind these guys hoping to take their jobs. Not all are qualified but some are.

    The whole point of having employees is so that they generate more income, directly or indirectly, than is expended on them. Otherwise, what's the point of keeping them employed? Again, it's rare that you're going to earn a lot more than you do now at the same job you're doing now. So the two best avenues to seeing your income increase is to get promoted or to start your own business.

  • by KiltedKnight (171132) on Friday July 30, 2010 @10:47AM (#33082882) Homepage Journal

    I worked for a Wall Street firm for a couple of years. My experience there is that the IT folks are overlooked as being an integral part of the success and failure of the company. For example, traders would be upset if their bonuses weren't equivalent to at least their annual salaries. Us IT folk, however, were lucky to see a bonus check that was equivalent to about twice our bi-weekly paychecks.

    In my exit interview, I told the person straight up... we're the ones providing the traders with timely data and faster calculations so that they don't have to go back to using a stubby pencil. Start recognizing what the IT people do, because if they all decided to stop working, the traders would be stuck going back to doing their calculations with stubby pencils and would fall so far behind they'd be losing more money than they'd be generating.

    Seems like my prediction finally came true.

  • Re:waaaaaaambulance (Score:3, Interesting)

    by Shotgun (30919) on Friday July 30, 2010 @10:48AM (#33082904)

    To back this up, as a developer it irks me to no end when a manager comes up to me and asks me to write a program from a design he wrote on a paper napkin over lunch at the Burger King.

    First off, with as much money as he makes...eat lunch at a real restaurant!!

    Second, my response is that you're going to get a crappy program unless you give a real design, or I do the job you want me to automate long enough from me to actually understand it. I CAN'T AUTOMATE WHAT I DON'T UNDERSTAND!! Finished. End of story.

    I have a piece of work that I have to use everyday that was written by a web developer brought in to help "automate" my job. It is such a POS, that it makes the easy stuff hard, and completely ignores the hard stuff. It is not the developer's fault. He didn't understand what I was doing, and just flew off the handle, creating automation where he saw possibilities.

    bberens is correct. The people who REALLY know the business, are the one that automate it (correctly).

  • by CAIMLAS (41445) on Friday July 30, 2010 @10:54AM (#33082994) Homepage

    Well, for starters, consider the knowledge such programmers need to have in order to write this software:

    * financial systems
    * frequency trading
    * surpassing existing frequency trading
    * high speed interconnects and the understanding of both mathematical programming and SMP utilization
    * intimate knowledge of "intelligent systems" and how to improve them using predictive math.
    * the ability to solve complex problems and adapt to the changing landscape, quickly, due to the rate of change in the ecosystem

    In short, we're not talking about bread and butter programming - this kind of stuff is likely much more difficult than any game programming out there, likely on par with game engine development in many ways. It's not easy, and slouches won't cut it.

    Not only that, but they're living in New York. I can live relatively comfortably on less than a third of what it'd take for me to "scrape by" in NY (note, I'm married with children, so I'm not your stereotypical geek): if it's not the high cost of living, it's the taxes on "not welfare receivers" and the constant fees for things like parking, vehicle registration, utilities, etc. A construction worker in NYC makes as much as $80k a year, for crying out loud (slightly over twice what I'm making).

    Even if renting a 2-bedroom "Economy" apartment in NYC, I'd likely end up spending more than my entire current salary - just on rent. That place is expensive. Similarly, I'm sure there's someone in Sudan or Somolia or wherever is pissed that those wingers in the US make $7.25/hour (or whatever minimum wage is now) to do food service. What extravagance! That must be why they hate us.

    That said, everything about frequency trading makes me ill. I'd be really happy if the so-called traders just fired them all, and the so-called "industry" went tits up. They are using the rough equivalent of ad-clicking bots.

  • Re:Car analogy (Score:4, Interesting)

    by Mongoose Disciple (722373) on Friday July 30, 2010 @10:56AM (#33083030)

    Mostly, they live in apartments you wouldn't want to live in in neighborhoods you'd probably get shot in.

    I spent a week in a hotel in Harlem for business about ten years ago. I'm not in a rush to go back.

  • by AGMW (594303) on Friday July 30, 2010 @11:01AM (#33083100) Homepage

    I don't know that I agree. I think this is a very subjective issue. The reality is, the amount of revenue derived partially from these programmers has absolutely nothing to do with what their compensation is or should be. By their rationale, every teller at a bank should have salaries commensurate with that bank's revenue, since they're an element in processing deposits/checks/payments/etc. Hell, the data center I run makes millions every hour, but I don't expect that I should make 7 or 8 figures because of it.

    If the Bank Tellers got some percentage of the money they made the bank by working on the counter that would be similar to the rationale proposed/suggested by the programmers. I suspect the the Bank Tellers often get paid more than they personally make for the bank. Also, if a teller decides to leave, the bank won't find it hard to find someone to replace them.
    The programmers, on the other hand, are directly increasing the bank's profits by their actions, and if they all left it would be more difficult to replace them (though obviously not impossible!).

    These programmers have done exactly the right thing by going it alone. Now they can make the big bucks off the back of their endeavours, but similarly risk making no bucks if it doesn't work.
    This is just as it should be, and well done to them for making the first leap ...

  • Re:Simple solution. (Score:4, Interesting)

    by lowrydr310 (830514) on Friday July 30, 2010 @11:01AM (#33083110)
    My brother worked in an industry that used a similar tactic; he along with about five other people were paid $40K per year to do a bunch of manual work which resulted in well over $2M in profit for the company. When they were promised a percentage of the earnings and never received it after two years, they all left and did the same thing on their own.

    Now their only downside is that they didn't have the capital that their previous employer did, and therefore couldn't scale their operation immediately to make $2M profit, however they still did quite well for themselves and things kept growing.

    In the case of the HFT programmers, what's to stop them from pulling off a malicious "Office Space" tactic (as mentioned below)?
  • by DragonWriter (970822) on Friday July 30, 2010 @11:10AM (#33083248)

    Programmers are a lot easier to find than people willing and able to lead/run a successful financial firm

    Or, financial firm executives just overvalue the skills of other financial executives and managers because doing so is natural and self-validating.

    If programmers were making the decisions on who to pay how much, programmers would probably get paid a lot more and non-programming managers and executives would get paid less. But, obviously, its going to be managers -- and particularly executives -- making those decisions, and its not particularly surprising who gets favored.

  • by broknstrngz (1616893) on Friday July 30, 2010 @11:12AM (#33083294)
    Mind you, I met a couple of Swedish software development managers who weren't even 25. Needless to say, they were complete morons at either management or software engineering. One sad, sad trend in Europe is thinking that if you go to college (after which you get your obligatory master's degree or even a doctorate) you'll be guaranteed to fit a manager role. I've had kids coming to interviews for software development positions, with no previous experienge, saying they expected to become managers in 6 months. Why? Because, they said, they went to the right university. It's not even funny. Most rich kids, who can afford turning 28-30 and still be in school, become managers only because they're unfit at anything else, since they totally lack the real world experience. I'm Romanian. I used to have a Croatian girlfriend who told me the same about her country. I now live in France. Guess what, it's the same.
  • by Anonymous Coward on Friday July 30, 2010 @11:17AM (#33083378)
    (Posting as AC because I'm closely involved to this subject)

    In this game, the investors are the only ones who "risk" anything. And ironically, they're also the ones with the least amount of power to decide how the money is managed.

    I'm not sure if you're aware, but these high-frequency firms (quants) are really just trading their own money. It's not like a fund that outsiders can participate in. The capital is owned by the principals of the company.

    You're right. The bosses don't directly control how their money is 'invested'. The algorithms take care of that.

  • by Kilrah_il (1692978) on Friday July 30, 2010 @11:33AM (#33083706)

    Most people miss an important point regarding salaries, and you actually referred to it passingly: Salaries are not given because of how much money you make or how directly you are connected to the money making portion of the business - you are paid for how hard it is to replace you.
    The teller in the bank is very important for the bank's profits. If there were no tellers, a significant portion of the bank's revenues would be lost. But, replacing a teller is easy. There are not so many requirements from a teller regarding former education/experience and the on job training is quite easy. On the other extreme, the CEO of the company is very hard to replace. He worked and studied years to be able to do his job (well, ideally) and the on job experience is invaluable and thus makes him hard to replace. When a CEO is replaced there is a period of unsteadiness in the company.
    Programmers are somewhere in the middle. It does not matter that they are the one that actually wrote the program. They are part of the profit-making machine in the same way that the marketing person that closed the deal and the catering guy that brought the food are critical to the proper operation of the company (don't know about you, but if the catering stopped catering, then my entire workplace will stop working :) ). What does matter is how hard it is to replace said programmer, and this depends on the complexity of the software he wrote. Maybe he wrote Pacman which is a simple program but brought lots of revenues or maybe he wrote the next version of Office all by himself. I don't know. The latter is very hard to replace and should be paid accordingly, while if the former is being paid 150k, then he should say thank you and STFU.*
    Bottom line, throwing numbers like: I make 150k a year while my boss makes 10x is pointless. The important thing is how invaluable you are. If you leaving will cause major problems to the company, they should pay more. If not, than you should stop complaining.

    * - Yes, I read the summery, and he codes algorithms for financial institutes, I gave those examples just to clarify my general point. No, I did not RTFA, problems? :)

  • by Aceticon (140883) on Friday July 30, 2010 @11:38AM (#33083788)

    For high-frequency trading you need
    a) To have highly realiable servers located right next to the exchange.
    b) To be a broker in the exchange so that your trading fees are not the sky-high retail fees that you would have to pay if going through a broker.
    c) Money for your systems to trade with, margin calls and such
    d) Backoffice systems to deal with things like settlement.

    This is the barrier to entry in this business that keeps anybody with the right knowledge to set-up high-frequency trading systems that compete with investment banks and hedge funds.

    If you read the article you see that some of these guys have left their banks and setup shop doing high-frequency trading because there is a company that provides them the conditions listed above while they provide the know-how AND this company has a better profit sharing arrangement that the banks/hedge-funds they were working for.

    For most exchanges there are no such companies around willing to lower the barrier to entry into this business for knowledgeable people, so there is no easy way for those people to get out on their own and do it without working for a bank.

  • by Anonymous Coward on Friday July 30, 2010 @11:54AM (#33084100)

    No, it isn't a "zero sum" game, just a very low sum game. When Wal-mart cuts pay to employees, where do you think that money goes? Do you honestly think it somehow works its way back around to the employee? Take a look around, man. Debt is at an all time high everywhere in the world, why do you think that is? Because the 'growth' in markets like this requires fuel, and can't be sustained. Greed is causing things to grow well beyond capacity, and to keep it from collapsing on itself, it requires more and more debt.

  • by Anonymous Coward on Friday July 30, 2010 @12:00PM (#33084228)

    As a student in computer engineering, my workload is likely double that of the average finance student. Those who are in high-rewarding positions are not there because they took the hardest classes.

    Certainly education plays a role, but my business future-overlords will not be my boss because they took tougher classes. They will be because they studied how to move money around to be 'efficient' and 'productive, ' and I will be in my place in society because I can make things that are useful to society. Whether the businessman provides a 10x benefit to society over the engineer is up to your personal ethics.

  • by TooMuchToDo (882796) on Friday July 30, 2010 @12:15PM (#33084506)
    Kevin Croner from Invesco disagrees with you, and I tend to agree with him. The minimal benefits provided by HFT firms is greatly outweighed by the negative effects they have on the market (and I say this as someone who used to trade commodities on the CME).

    http://www.npr.org/templates/story/story.php?storyId=127747626 [npr.org]

    JOFFE-WALT: This is Steve Rubinow with the New York Stock Exchange, and he says if you want to sell something, you want to buy something, those high-frequency computer are there to sell and buy from you.

    Mr. RUBINOW: Which makes for a fairer market for all participants, both the people that are up to their necks in it, and people like you and me as retail customers. Those prices are about as fair as they can be.

    JOFFE-WALT: No way, says Kevin Cronin. He works for Invesco. And Cronin is more like what you think of as a regular investor - manages big pension funds and mutual funds. And he says high-frequency computers watch what he does. When he starts to buy, the computers swoop in and start to buy as well, and then sell at a higher price minutes, sometimes even seconds later.

    Mr. KEVIN CRONIN (Director, Invesco Global Equity Trading): They dont care about the stocks. All they care about is jumping in front of us and making a penny or two, and doing that millions of times a day.

    JOFFE-WALT: That seems annoying to you. But why is that...

    Mr. CRONIN: Of course it's annoying.

    JOFFE-WALT: Oh, but why is that wrong?

    Mr. CRONIN: What are they doing to provide anything in the marketplace other than trying to take the information that our orders give and try to profit themselves?

    JOFFE-WALT: Now, high-frequency traders counter that anyone can pay to get access to that information and that speed.

  • Re: Same Old Story (Score:3, Interesting)

    by ELitwin (1631305) on Friday July 30, 2010 @12:33PM (#33084868)
    This is the same old story, and it is a very old story indeed. I've been reading a lot of Civil War history lately, especially about the political and economic factors leading up to the war. As the north was industrializing, many craftsmen and factory workers were making the exact same complaints about the factory owners and bankers who were making all the money but had no "skills" to actually create the textiles, weapons, furniture, etc. Things haven't changed that much in the last 160 years.
  • by JoeMerchant (803320) on Friday July 30, 2010 @12:34PM (#33084896) Homepage
    What I have seen of fund investors in that good luck is required to do well... however, bad luck is not required to do poorly, there are managers who consistently fail. If we all had 1000 years to play this out in, we could separate the good from the bad on statistics, unfortunately, in the span of a 30 year career it is almost impossible to tell.
  • by l2718 (514756) on Friday July 30, 2010 @01:27PM (#33085772)

    First of all, money is constantly being created and destroyed. Central banks print bills, burn old bills, inject cash into the economy by making short-term loans to banks, et cetera.

    Secondly, goods both tangible and intangible are constantly being created, and these have value too. Economics is not a zero-sum games because both sides benefit from a voluntary exchange (otherwise they wouldn't do it!). When I give the store $10 and they give me a book we are both better off -- I'll enjoy reading the book more than having the $10 in my pocket. The owner of the store will enjoy the $10 more than the book (for example, he could use part of the $10 to buy lunch). Yes, money was conserved in this transaction (money-wise this was a "zero-sum interaction") -- yet looking only at the money misses the point. This exchange isn't simply me "losing" $10, and the store owner "gaining" $10. Rather, because owning the book has different value to both of us, we both gained: I gained the difference ((enjoyment of book + resale value of book) - $10). The owner gained the difference ($10 - costs of getting, storing and selling the book).

  • by runningduck (810975) on Friday July 30, 2010 @08:53PM (#33091810)
    Now that you are in a senior position, do you insure that people below you are generously paid? How much of a pay increase would you be willing to forgo in order to reward the people underneath you who contribute to your success?

For God's sake, stop researching for a while and begin to think!

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