The Changing Face of the Market

An 8-Year Retrospective as a Recruiter

Last week marked my 8th anniversary at Durlston Partners and in the recruitment industry. This milestone has prompted me to pause and reflect on my journey and the evolution of the landscape of the industry we operate in.

A Humble Beginning

Thursday 10th of September 2015; I touched down at Gatwick from France, with aspirations of honing my English skills. Little did I anticipate that this (intended 9-month experience) would shape the rest of my professional life.

Four days later, a young, naive and eager version of myself turned up at Durlston Partners‘ modest office on Hill Street, Mayfair. With zero knowledge of recruitment, quant finance or software engineering, I was a blank slate. Today, our team has grown tenfold, and I’ve garnered invaluable insights into the quantitative finance, software engineering, machine learning, and cryptocurrency sectors.

The War for Talent

Over the past eight years, the quantitative finance sector has evolved into a fierce battleground for talent. As the financial market increasingly adopted algorithmic and high-frequency trading strategies, the demand for skilled quantitative researchers, data scientists, and software engineers surged. Traditional financial institutions and top quantitative trading firms found themselves competing with tech giants for the same talent pool, escalating compensation packages in the process.

London, a magnet for global talent, has continually drawn intellectual powerhouses. This magnetic pull has enticed a plethora of elite firms to anchor their operations here. In 2015, the crème de la crème of graduates gravitated towards investment banking giants like Goldman SachsJ.P. Morgan, and Morgan Stanley, with starting packages oscillating between £40,000 to £50,000. These figures have since swelled by 30-50%, driven partly by inflation but mainly due to market competitiveness.

In a testament to the market’s evolution, we’ve recently observed entry-level software engineers and quantitative researchers clinching roles with jaw-dropping compensation packages, sometimes ranging between £250,000 to £500,000 in their debut year.

Compensation structures have also transformed, leading firms now dangle enticing carrots in the form of hefty sign-on bonuses and guaranteed first-year bonuses. This trend can be attributed, in part, to extended non-compete clauses, which can span anywhere from 3-6 months to a staggering three years.

With multiple offers on the table, top candidates now have the luxury to choose roles and the key has been to offer a holistic package that goes beyond just compensation, focusing on culture, growth opportunities and work-life balance – aspects that were seldom discussed when I began my career in 2015.

The Need for Speed

Hedge funds, once focused on long-term strategies, have recalibrated to the tempo set by proprietary trading firms. These firms leverage quantitative and algorithmic techniques to exploit minor price discrepancies. Today, high-frequency trading (HFT) and mid-frequency trading (MFT) dominate a significant chunk of the global financial market’s trading volume.

The proliferation of big data and AI has been a game-changer, providing trading firms with unprecedented data access and facilitating the creation of more advanced trading strategies. The emergence of alternative data sources, such as satellite imagery, credit card transactions and social media sentiment analysis, has provided fresh avenues for alpha generation.

Yet, the heightened competition presents challenges. Strategy saturation and swift alpha decay have pressured firms to incessantly innovate. This climate has amplified the talent hunt, from gifted mathematicians crafting cutting-edge algorithms to tech wizards optimising trading platforms and shaving off latency.

Machine Learning: Beyond Data Cleanup

Eight years ago, Machine Learning in quantitative finance was synonymous with data cleanup. Only a select few firms were harnessing its alpha-generating potential. Now, Machine Learning is pivotal in trading, with algorithms playing active roles in decision-making. Traders have shifted from rule-based algorithms to intricate ML models that process vast data in real time.

Deep Learning and Neural Networks have revolutionised the industry, processing a myriad of data types and offering traders insights that were once deemed impossible.

Leading Quantitative Trading firms are now in a race to hire talents from renowned AI firms like Google DeepMindOpenAI and Anthropic. Many of these firms have also established dedicated AI Labs, focusing on cutting-edge research in areas such as Generative AI and Large Language Models (LLMs).

These labs are equipped with the latest GPUs, and it’s no wonder there’s a global shortage given the soaring demand, especially when companies like NVIDIA claim a 1,000x speedup for backtesting in algorithmic trading.

Cryptocurrency: From Wild West to Wall Street

In 2015, the world of cryptocurrencies was still in its infancy and resembled the wild west, largely teeming with young and ambitious (often reckless) individuals executing trades with varying degrees of success.

However, the 2017 crypto bull run changed everything, not only for the soaring market prices and flurry of (often sketchy) ICOs but also for the mainstream attention the space garnered. This was the year when BitcoinEthereum, and Blockchain became household names and institutional money started to pour in.

Today, a significant chunk of our roles in this sector are with VC-backed startups, often established by seasoned professionals from traditional finance, infusing much-needed maturity and stability into this market.

A notable trend is the recent crypto industry’s gravitation towards the Middle East, particularly Dubai and Abu Dhabi. These cities, with their favourable regulatory climates, substantial investments, tax perks, and thriving ecosystems, have become global crypto hubs.

Despite recent market turbulence, institutional interest remains strong, with many clients establishing dedicated crypto trading desks. The continuous influx of billions into crypto projects underscores the market’s long-term potential.

My Journey Continues

As I look back on the past 8 years, the journey has been nothing short of exciting. From my early days as a novice recruiter to engaging in thousands of enriching conversations with industry leaders, I have been privileged to be part of this ever-evolving industry.

With anticipation and excitement, I am looking forward to the countless interactions and opportunities the next 8 years will bring.

Written by Alexandre Jouatte

📅 This Week in Crypto 📅

“I’ve been running a crypto fund for 1,825 days.” Jeff Dorman, CFA, chief investment officer at Arca, says crypto funds still need to find a balance between adopting professional Wall Street practices and taking advantage of crypto’s unique opportunities.

Also discusses recent trends in the crypto market along with the major players in the industry.

Citi is launching a new digital token service and blockchain system, in its latest investment into digital assets. The $1.72 trillion asset manager will launch the digital token, called Citi Token Services, for real-time payments. According to Citigroup, the product will turn customers’ deposits into digital tokens, which can be sent instantly to anyone worldwide. The firm’s treasury and trade solutions division will run the new digital asset.