Top HFT Firms in the Industry Today

In the fast-paced world of high-frequency trading, a few firms stand out from the rest. Citadel Securities, for example, is one of the largest HFT firms, with a reported 35% market share in US equities.

Virtu Financial is another major player in the industry, with a presence in over 30 countries and a market share of around 20% in US equities. These firms have built their success on their ability to execute trades at incredibly high speeds.

One of the key factors that sets these firms apart is their access to high-speed networks and advanced technology. This allows them to react to market changes in real-time, making them incredibly competitive in the HFT space.

Citadel Securities' advanced technology has enabled them to reduce their average trade execution time to just 10 microseconds, giving them a significant edge over their competitors.

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Tower Research in Gurgaon is one of the top High Frequency Trading (HFT) firms in India. They're not alone, though - other notable firms include Goldman Sachs, Morgan Stanley, and iRageCapital, all based in Mumbai. Estee Advisors, Quadeye, and APT are also prominent players in Gurgaon.

In contrast, Proprietary Trading Firms, which are the second-fastest in terms of trade speed, include Jane Street, Citadel Securities, and IMC. These firms often overlap with HFTs, with some, like Jump and Citadel Securities, doing both.

Here are some of the top HFT firms globally, including some notable players in the US and Europe:

Jane Street is a top HFT firm that's most well known for its pursuit of entry-level talent. They offer some of the highest paying internships and graduate positions available.

Jane Street hires entry-level engineers with some of the highest pay rates in the world, with an average total compensation of $436k in 2023. Interns have even been known to earn $64k in just 11 weeks.

They're always on the lookout for fresh talent, so if you're an alumnus of one of their target schools, you're in a good place. Job titles can be a bit vague, but that's just part of their unique culture.

Here are some notable facts about Jane Street's hiring and pay:

Virtu Financial is the only publicly traded HFT firm on this list.

It completed a $1.4bn takeover of rival HFT KCG Holdings in 2017, which had close to 1,000 employees at the time.

Virtu has a significant workforce, with social media data suggesting they have upwards of 900 staff members today.

Despite its size, Virtu is hiring for just 16 roles at the moment, many of which are internships.

The company is offering internships with quant roles in both New York and Singapore, with some paying up to $4.5k per week.

However, a few senior people have left Virtu recently, including CEO of Virtu Canada, Ian Williams, who left this month.

Virtu's performance has been declining in recent years, but pay has been rising, with the company increasing its total wage spend to $394m.

The median salary for a software engineer at Virtu is reportedly $290k, according to Levels.fyi.

Jump is a stalwart of HFT, led by ex-JPMorgan VP Dave Olson as president and CIO. It has a significant presence with around 1400 employees in 9 locations, including London, Chicago, and Singapore.

Jump has seen a notable increase in its workforce, growing from around 350 employees in 2017 to its current number. It is hiring interns, particularly in its Shanghai office.

The firm has a strong track record of hiring from hedge funds, with senior quants like Michael Shamis and Florian Capolunghi joining from Point72's Cubist Systematic Strategies and Millennium, respectively.

Jump Trading's UK arm paid an impressive average of $972.4k to its 271 employees in 2022, but this figure is not evenly distributed. Software engineers, for example, can expect a firmwide average salary of $379.9k in 2023.

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Tower Research Capital is a high-frequency trading (HFT) firm that's been around since 1998. It was founded by Mark Gorton, a former Credit Suisse prop trader.

The company has a unique team composition, consisting of engineers, physicists, and computer science graduates. Tower Research Capital has more than tripled its headcount since 2017, driven by aggressive hiring in India.

In fact, the company has 52 open roles currently, with no single office benefiting the most from this hiring spree. London has six open roles, while Singapore has ten, and New York has twelve.

The pay at Tower Research Capital is impressive, with its European arm averaging out at $770.7k in 2022. This is a significant increase from the $488.1k payout the year before.

Radix Trading is a notable niche firm with around 150 employees in Chicago. It was founded by Benjamin Blander and Michael Rauchman.

Radix is known for hiring interns and paying them well, with some interns earning $160 per hour and a $25k signing bonus.

They also have a strong track record of hiring senior talent, such as Raman Katri, who spent over 12 years at Tower Research Capital.

Radix's salaries for full-time quants range between $150k and $200k, although it's likely that total compensation is much higher.

High frequency trading firms, or HFTs, are known for their lightning-fast trading speeds. They operate with holding periods measured in minutes, seconds, or less.

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To achieve these incredible speeds, HFTs rely heavily on advanced code and infrastructure. In many cases, you'll need to know C++ to get hired.

Their speed allows them to have the highest Sharpe ratios, a measure of risk-adjusted returns, in the space.

Firmwide profit and loss, or PnL, isn't necessarily the highest for HFTs despite their impressive Sharpe ratios.

High Frequency Trading is a trading practice in the stock market for placing and executing many trade orders at an extremely high-speed.

High Frequency Trading uses algorithms for analysing multiple markets and executing trade orders in the most profitable way. These algorithms are designed to make quick decisions based on real-time market data.

A High Frequency Trader uses advanced technological innovations to get information faster than anyone else in the market. This information is used to execute trading orders at a rapid rate with high frequency trading algorithms.

Co-location is the practice to facilitate access to such fast information and also to execute trades quickly. This allows traders to stay ahead of the competition and make faster trading decisions.

High Frequency Trading facilitates trading at a high-speed and is one of the factors contributing to the maximisation of the gains for a trader.

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HFT Strategies are numerous and varied, each with its own end objective and underlying philosophy. Some of the important types of HFT Strategies include Execution High Frequency Trading Strategies, which seek to execute large orders without causing a significant price impact.

Execution HFT Strategies include VWAP (Volume-Weighted Average Price) and TWAP (Time-Weighted Average Price) Strategies, which are used to execute large orders at a better average price and without affecting the price, respectively. VWAP is the ratio of the value traded to the total volume traded over a time period.

Automated High Frequency Trading Arbitrage Strategies try to capture small profits when a price differential results between two similar instruments, such as the S&P 500 futures and SPY (an ETF that tracks the S&P 500 index). These Strategies require rapid execution to quickly maximise gains from the mispricing.

Other HFT Strategies include Order flow prediction Strategies, which try to predict the orders of large players in advance by various means, and then take trading positions ahead of them to lock in profits as a result of subsequent price impact from trades of these large players.

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Ansatz is one of the many niche HFT firms, known for being secretive and highly sought after by quants and engineers. It has a reputation for being one of the best-paying firms in the space.

Ansatz has made only two hires in the past year, including Roman Rubanenko, a former algorithm engineer at Hudson River Trading, and Andrew Campbell, an ex-Citadel strat who was previously head of data science at eCommerce startup OpenStore.

The company is small, with a handful of employees in their early thirties making millions annually, according to a former employee.

High Frequency Trading (HFT) involves executing large orders quickly and efficiently. Orders are a crucial aspect of HFT strategies.

The four types of HFT orders are discussed in an infographic, but for our purposes, we'll focus on the fact that HFT includes four types of orders.

HFT market-makers are required to submit and cancel a large number of orders for each transaction, as part of their liquidity provisioning strategy.

This can result in a high order-to-trade ratio, which is a key characteristic of HFT. A high order-to-trade ratio can be a problem, as it can lead to manipulative activities.

To address this issue, regulators are considering implementing a "surge charge" on traders with high order-to-trade ratios. This would charge a fee for excessive order submissions and cancellations.

HFT market-makers use various models to continuously update their quotes in response to other order submissions or cancellations. This can be based on the type of model followed by the HFT market-maker.

Here's a breakdown of the four types of HFT orders:

Speed is a crucial aspect of High Frequency Trading (HFT). It's no longer about being the fastest to react to market changes, but rather about making internal decisions quickly.

In traditional HFT, speed was mainly about external transmission delays. However, firms have since learned to optimize their internal decision time, making it virtually insignificant.

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High Frequency Trading Proprietary Firms can now trade from anywhere and at any point in time, which has made it a preferred option for FX trading. This level of flexibility is a significant advantage in the fast-paced world of HFT.

Some of the key characteristics of HFT firms include their ability to trade in various assets, such as stocks, futures, bonds, options, and FX. They can execute trades rapidly, taking advantage of even the smallest price differentials.

High Frequency Trading firms face significant challenges in dealing with big data, which can increase processing time beyond acceptable standards if they don't have the latest hardware and software technology.

Their reliance on microsecond/nanosecond latency also creates problems that require state-of-the-art solutions.

In order to stay competitive, HFT firms need to invest heavily in cutting-edge technology to handle the enormous data they work with.

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Decision making is crucial in High Frequency Trading, as it involves quick internal decision time to select the best trade and avoid worthless trades.

Internal decision time is a key factor in HFT, as it allows traders to make decisions rapidly and accurately.

In HFT, the first trader to pick a trade can sometimes be the only one to avoid a worthless trade.

High Frequency Trading is unique in many aspects, making it essential to understand its characteristics.

A trader's internal decision time is critical in HFT, as it directly impacts the trade's value and potential profitability.

To succeed in HFT, traders must be able to make quick decisions and adapt to changing market conditions.

High Frequency Trading firms face significant challenges in dealing with big data, which can slow down their processing time beyond acceptable standards if they don't have the latest state-of-the-art hardware and software technology.

The sheer volume of data is staggering, with billions of data rows collected from market data changes that trigger new orders in a few hundred nanoseconds.

To put this into perspective, HFT systems produce new orders at an incredibly fast pace, making it difficult to manage and process the data in a timely manner.

High computation load is a major issue for HFT players, who need to respond quickly to market changes and make decisions in a matter of microseconds.

Collecting tick-by-tick data, which consists of billions of data rows, is a significant challenge that requires robust hardware and software infrastructure to handle the load.

Market microstructure noise is a phenomenon that can make high-frequency estimates of parameters like realized volatility very unstable. This noise is caused by various factors that can affect the accuracy of our trading decisions.

One of the main causes of market microstructure noise is the bid-ask bounce, which occurs when the price for a stock keeps changing from the bid price to ask price. This movement takes place only inside the bid-ask spread, resulting in high volatility readings even if the price stays within the bid-ask window.

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Asymmetric information can also contribute to market microstructure noise, making it difficult for high-frequency traders to put the right estimate of stock prices. This is because non-aligned information can lead to inaccurate pricing.

Discreteness of price changes is another factor that can cause market microstructure noise. With no stability in price changes, it's not feasible to base our estimation on such information.

Order arrival latency is also a significant contributor to market microstructure noise. High order arrival latency can make it difficult for traders to base their order execution decisions at the most profitable time, while low order arrival latency can allow orders to reach the market at the most profitable moment.

Excessive Order Submissions and Cancellations are a prominent characteristic of High Frequency Trading firms, with market-makers submitting and canceling a large number of orders in a very short amount of time.

This behavior can lead to manipulative activities, and to curb it, a fee for high order-to-trade ratio traders has been considered.

Regulators are working on the concept of a "surge charge" on traders whose order-to-trade ratio is high, as reported by Business Standard on 13th August 2019.

A tax or high order-to-trade ratio charge can hinder manipulative activities and improve liquidity in general.

Long Term Investors, on the other hand, start with large capital and earn high profits over a long period of time, resulting in higher transaction costs but also higher profit margins.

In the world of High Frequency Trading (HFT), compliance is a top priority. All HFT firms in India have to undergo a half-yearly audit.

Maintaining accurate records is crucial for this process. You'll need to keep order logs, trade logs, control parameters, and other relevant documents for the past few years.

Certified auditors are the only ones who can perform this audit. They must be listed on the exchange's website, such as the NYSE for the US.

This auditing process is a critical aspect of regulatory requirements in HFT.

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