UK
Options tipped for algorithmic explosion
13 May 2008
If you’re a technologist working in the algorithmic trading space, you should get to know your options.
The majority of the activity surrounding development of algorithmic trading platforms has typically centred around equities, but the options space could soon join in.
Research firm the Aite Group has estimated that 20% of flow in the options market will be algorithmically generated by 2010 – up from 7% last year.
Sang Lee, co-founder and managing partner of research firm Aite Group, says: “It’s just in the beginning stage. It’s a natural progression of what’s happening in the market.”
And Robert Mahoney, managing director of online options brokerage thinkorswim, told Securities Industry News that “the majority of the options world is going to be electronic and the majority of that is algorithms.”
Still, it’s all very well talking about breaking into new asset classes, but recruiters reckon that algo trading roles, like most IT roles, have slowed of late.
Catherine Collins, senior consultant at Cazar Search, says: “There was a big boom in mid-2007, but the number of roles has waned slightly recently. However, because you’re working with more complex systems and trading models, it’s still a very attractive area to work in.”
Algo trading systems will generally centre around either C#, C++ or Java technologies, but technologists working in this area will be the crème de la crème, believes Paul Elworthy, associate director in the IT and banking finance division of recruitment firm Hudson.
“Algo trading is a bit slow at the moment, but people with experience in this area will have no trouble getting another development role, as having this on your CV is testament to your abilities,” he says.
Developer roles in the algo trading space generally pay around the £80k mark, but Elworthy reckons that candidates moving into this space have seen a “significant uplift” in total compensation over regular investment banking technology roles.
