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July 18, 2024
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Hedge Funds

The hidden differences for employees

If you’re an exceptional developer or mathematician who wants to make an exceptional amount of money in the financial services industry, you’re probably familiar with the two key portals for doing so: Citadel Securities and Jane Street.

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There are similarities between the two. There are also differences. Not all are well known.

Citadel Securities is an electronic market making firm founded and majority owned by Ken Griffin, founder of hedge fund Citadel. It doesn’t state its revenues publicly, but in 2022 it reportedly made $7.5bn, and in the third quarter of 2023 alone, it reportedly made $1.8bn. Citadel Securities starting out making markets in equities, and handles around 25% of all US equities trades. It’s now pushing into credit trading under Shyam Rajan, the global head of fixed income, who joined from hedge fund LMR.

Jane Street is also an electronic market making firm. It was founded in 2000 by a group of technologists and traders including Rob Granieri, who still works there. Jane Street generated $7.9bn in revenues in the first nine months of 2023. Its bread and butter is exchange traded (ETF) trading, but it’s diversified into other areas, including equities, derivatives and energy trading.

Jane Street and Citadel Securities declined to comment for this article.

Non-competes: not at Jane Street 

If you’re planning to work for either Citadel Securities or Jane Street, the key thing you need to know is that Jane Street doesn’t impose non-competes, but that Citadel Securities does.

Citadel Securities’ non-competes can last up to two years (but are often shorter) and are frequently imposed even on its comparatively junior quantitative and technical employees. They prevent people from leaving Citadel Securities and immediately joining competitor firms and mean people are paid to sit out of the market. Depending upon how you look at it, this is either boring or a great opportunity to go on holiday.  

Employees at Jane Street don’t have this dilemma: they’re free to go wherever they like immediately.

Hardly anyone leaves Jane Street

Although people can leave Jane Street whenever they want, they don’t seem to do so. Citadel Securities has low staff turnover, but turnover at Jane Street is lower still. Jane Street interns come and go, but Jane Street’s graduate hires and more senior staff seem to stay forever. The exception is Sam Bankman-Fried who left to found FTX (and probably regrets it). 

Citadel Securities is known for having a comparatively centralized, corporate, culture. Jane Street is not. 

When the Financial Times wrote about Jane Street three years ago, it said there were no real job titles there and the firm was akin to an “anarchist commune” run by 40 people who rotated between roles. This remains the case. 

“Jane Street is known for its collaborative culture, generous compensation, low turnover, absence of non-compete clauses and open and intellectually stimulating environment,” says one senior quant trader.  “Citadel Securities is perceived as more centralized and performance-driven.”

On the downside, Jane Street’s lack of a hierarchy can arguably make it harder to get promoted. At Citadel Securities, you know where you stand. As Jane Street has grown rapidly, there are also suggestions that the culture there has been diluted. 

“Jane Street is for traders, Citadel Securities is for quants”

One senior hedge fund quant, says Jane Street is a place for traders and that Citadel Securities is better for quants and developers. “Jane Street is trader-oriented, while Citadel Securities is more systematic,” he claims. “Traders are far more sociable, which is why Jane Street is playful and has a big poker culture.” 

Another senior quant trader says Citadel Securities is the better place to work if you’re a quantitative researcher or a quant developer. “At Citadel Securities, the business developers, lead researchers and the software engineers control the technological stack and have more influence,” he claims. At Jane Street, they’re allegedly second to the traders. 

Jane Street’s obscure technology locks you in 

Jane Street’s systems are written in OCAML instead of C++. While this has some advantages in terms of functionality, recruiters say it creates employability issues for Jane Street staff. 

“People stay at Jane Street because they love it, but they also stay at Jane Street because no one will buy you when you have spent your career coding in OCAML,” says one recruiter who works with both firms.

Citadel Securities offers employees more visibility over their work

Citadel Securities insiders say they have more visibility over the outcomes of their projects and code than they would at Jane Street. Speaking off the record, the hedge fund quant claims that some Jane Street traders are not even aware of their own daily pnl. 

Jane Street interviews are the hardest

In the words of one top quant, Jane Street is known for its “high bar for problem-solving abilities on the way in.”

Jane Street’s interviews are known for being a nightmare in which the firm fires increasingly difficult problems at you. “The Jane Street interview was one of the most exhausting batteries of my life,” says one quant who went through the experience.

When Sam Bankman Fried interviewed at Jane Street, he was asked to play poker and solve probability questions. This was over ten years ago, though.

Citadel Securities’ quants don’t have to complete coding or online tests. They may be asked to attend four rounds of technical interviews and to complete real time coding challenges while those interviews take place.

Citadel Securities and Jane Street pay the same at the start, but Citadel will pay more to hire people in

Both Jane Street and Citadel Securities pay very well indeed. The going rate for interns at Jane Street was $23k a month last year. At Citadel Securities it was $21k plus allowances. 

Pay at both firms rises with seniority. Average compensation at Citadel Securities in London was $685k last year. At Jane Street it was $890k. 

However, headhunters say Citadel Securities is more generous than Jane Street when it comes to buying talent from elsewhere. “They’re the kind of firm that will say ‘Give us your number and we’ll see if it works,'” says one. “But if you stay at Jane Street over the years and are the right kind of person, it can be incredibly lucrative.”

What is the right kind of person for Jane Street? “Technocratic and rationalist,” says one insider, adding that if that’s not you, you won’t fit in.

The senior quant says ultimately both firms have advantages. ” One culture isn’t superior to the other; rather, they reflect different approaches to achieving success in the financial markets. Each firm’s culture has its own set of advantages and challenges, and they cater to different types of individuals and career aspirations.”

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