Bonuses for hedge fund IT staff jump up to 60% year on year

Bonuses for hedge fund IT staff jump up to 60% year on year

80% bonuses becoming commonplace

Base salaries for senior IT staff now approximately £100K

Senior IT professionals working for hedge funds are enjoying bumper bonuses in 2011 that are up to 60% higher than last year, says ReThink Recruitment (ReThink), the business and technology staffing company.

According to ReThink, IT staff with experience in designing and implementing algorithmic trading platforms can now expect bonuses of up to 80% of base pay, up from approximately 50% of base pay in 2010.

ReThink adds that some highly qualified IT staff working for hedge funds are now earning a base salary of approximately £100,000, with senior contractors typically earning £750 per day. Bonuses for some of the highest-performing staff have jumped from around £50,000 in 2010 to £80,000 in 2011.

ReThink explains that there is a growing trend for hedge funds to pay bonuses quarterly, rather than on an annual basis as in investment banking.

ReThink says that whilst investment banks have had a consistently poor year the wide range of trading strategies followed by hedge funds means there are enough funds having good years to keep pushing pay rates up for the right IT staff.

Fhamid Malik, Head of Financial Services at ReThink, says: “Competition amongst investment banks and hedge funds to create the fastest and most reliable trading systems is leading to a shortage in the supply of IT staff with key skills.”

ReThink explains that a strong run until April of this year prompted heavy investment in “greenfield” builds – where hedge funds bought in new software to replace or upgrade bespoke IT systems. Algorithmic trading strategies require platforms that need substantial IT investment. Hedge funds will be constantly investing in IT systems to reduce the “latency” (i.e. possible trading delays) of these platforms.

Heightened regulatory requirements have also pushed investment in IT up the priority list for most hedge funds.

Research from the Hedge Fund Journal showed that 298 hedge funds were launched during the first quarter of 2011, the highest launch rate since 2007.

Fhamid Malik says: “By the end of the second quarter this year, the global hedge fund industry broke through the two trillion dollars of assets under management milestone. Many funds have been upgrading their IT platforms, which has pushed up demand for qualified staff. Continued regulatory pressure has also meant that funds are re-engineering their front office systems, to ensure better tracking of complex financial transactions.”

“A shortage of candidates has meant that bidding wars for top staff can easily erupt – which can result in base salaries being increased by up to 30% to stop key members of their IT teams leaving.”

ReThink explains that hedge funds are increasingly prioritising IT staff who have high level knowledge of front office trading and pricing analysis rather than pure technology specialists. Favoured skills include C# and .Net.