[HN Gopher] Takeaways from the Jane Street bond prospectus
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Takeaways from the Jane Street bond prospectus
Author : henrik_w
Score : 325 points
Date : 2024-05-01 08:05 UTC (1 days ago)
(HTM) web link (www.ft.com)
(TXT) w3m dump (www.ft.com)
| peterhadlaw wrote:
| They discriminate employment based on what school you go to, or
| at least they did circa 2013
| 55555 wrote:
| Don't all companies do this? That's why the name of the school
| you went to is on your resume.
| pquki4 wrote:
| Even so, probably not nearly as much as McKinsey
| tourist2d wrote:
| I imagine they also "discriminate" on skills and previous jobs
| you have too..
| SkipperCat wrote:
| Its mostly done as a way to filter job applications into a
| smaller set. When Google was the 'hottest' job prospect (many
| years ago) they needed a way to reduce the set of applicants
| down to a number where hiring managers could handle the load.
| Setting criteria such as having an Ivy League degree or a CS
| degrees with GPA over 3.8 was a logical way to achieve this
| goal.
|
| That being said, if you went to a community college but also
| had 10+ years experience at one of their competitors (eg: DE
| Shaw, 2Sig, Citadel, etc), you'd almost be guaranteed an
| interview. But once again, thats another very small set of
| applicants.
| znpy wrote:
| > Setting criteria such as having an Ivy League degree or a
| CS degrees with GPA over 3.8 was a logical way to achieve
| this goal.
|
| It wasn't a "logical way", it was an "easy way". That's
| classist at the very least.
| SkipperCat wrote:
| To a certain extent, you are correct. However, companies
| like Jane Street need to filter and doing so based on
| colleges is the most efficient when other factors are all
| equal. Top tier colleges strive to base their admittance on
| performance and strive to be racially and culturally
| diverse. This gives Jane Street the ability to say they
| filter on the same criteria.
|
| I'm all ears if you have a better system that is more
| efficient. I'd also add that I went to a State college and
| my resume would have been tossed if I applied as a starting
| engineer too.
| gadders wrote:
| >>and strive to be racially and culturally diverse
|
| But not socio-economically.
| iknownthing wrote:
| I'd say just go with GPA.
| tombert wrote:
| I kind of agree, but I do wonder if that's largely
| confirmation bias though; they hire the best engineers
| they can find from an Ivy League, don't bother even
| looking at decent state school people, then the Ivy
| League engineers they hire do well and they assume it
| must because they went to an Ivy League school.
|
| I know that fancy colleges like to say that they strive
| to base admittance on performance, and I believe that's
| true to an extent, but it certainly seems like they make
| an exception for students who come from a lot of money.
| I've mentioned this before but think about any politician
| that you think is un utter moron, and there's still a
| reasonably good chance that they went to an Ivy League
| because they come from a rich family.
|
| And it annoys me that people act like Ivy League schools
| are the only ones that accept based on performance. I
| applied to a bunch of state schools as a teenager and I
| got declined by a bunch of them. We can wax philosophical
| about why I was declined but I doubt it was personal,
| just that they probably didn't think I would perform well
| based on some metric.
| lupire wrote:
| You seem to be conflating "logical" with "moral".
| eddieroger wrote:
| It makes logical sense - if they look over their staff and
| search for commonalities amongst successful employees, and
| trends like school or CS degree and GPA stand out, then
| it's logical to assume that will predict further success
| and thin the pool. It's a jerk move, sure, but it can be
| both.
| vintermann wrote:
| > they needed a way to reduce the set of applicants down to a
| number where hiring managers could handle the load
|
| The question is what other attributes you "accidentally"
| filter by if you filter by school prestige. Even if you do
| bias your pool to individually better candidates on average,
| you may bias it in a lot of other ways.
|
| If the purpose of the filtering is to reduce the pool to a
| size where humans with common sense can make sensible calls,
| then that CC graduate with 10+ years of competitor experience
| would likely be filtered out before common sense could
| suggest he might be good anyway.
| SkipperCat wrote:
| They're smart enough to know how create filters that don't
| miss people with competitors experience on their CVs. In
| fact, they actively seek those people out on LinkedIn and
| anywhere else they can find them.
|
| HFT jobs are high value / high comp jobs, so Jane Street
| and their cohorts put a lot of effort into recruiting. This
| includes their resume intake system, internships with
| desirable colleges and professional outreach.
| boppo1 wrote:
| Who is the 'hot' employer now? OpenAI?
| pasc1878 wrote:
| So do most popular companies.
|
| they get many applicants for a job. So you have to filter those
| applications. One way is to recruit from known places where
| they have already got people from as they know it worked.
| Typically those universities also filtered on how good you were
| and so the average quality is higher from those.
|
| Obviously there will be exceptions but not work spending time
| to find them. Recruitment costs a lot in time and money.
| kettleballroll wrote:
| I come from a very small provincial university, but they still
| reached out to me 2018, so I don't think so. (I bombed their
| interview and didn't get an offer, though).
| tombert wrote:
| In 2016 I was still a dropout and they did an interview with
| me. I also bombed it.
|
| I have applied about a dozen times since then after getting
| my degree from WGU and they haven't gotten back to me; I
| almost wonder if not putting any college experience on the
| resume was a blind spot for their filter.
| ilc wrote:
| Maybe quite the opposite. Wall Street and Finance is can be
| very aggressive and learn it for yourself.
|
| I learned math of finance from a professor I'm pretty sure
| was quanting on the Street at the time.
|
| When I told him one of the constants in our little trading
| game was off by a factor of 10x, he said prove it. My final
| talk was: "How to make 2.3 million dollars in 30 days using
| options."
|
| The real lesson wasn't about pricing options. It was about
| being ruthless when the time came.
| tombert wrote:
| Fair enough; I wasn't applying for a quant position, just
| a software job. Looking back, I suspect the real reason
| that they were even considering me was because I had
| professional Haskell and Scala experience on my resume,
| and so I looked appealing, particularly if a dropout was
| learning it for fun.
|
| What I find amusing is that I'm categorically a much
| better functional programmer now than I was then, with
| professional F# experience with a lot of Clojure to boot,
| but they haven't responded back to any of my applications
| in the last three years.
| cess11 wrote:
| They might want to shape developers on the job and bet
| that it's on average cheaper to do with functional-
| curious people rather than those that have professional
| experience in ML-languages.
| tombert wrote:
| Yeah fair, I definitely have developed pretty strong
| opinions on the "right" way to do things in functional
| languages, and those opinions likely do differ somewhat
| from theirs, at least in some cases.
|
| I think if I want to work at Jane Street now, I either
| need to finish my PhD, or get a Masters degree from a
| sexy school to "cleanse" my WGU degree (despite the fact
| that I don't think I know _much_ less than the average
| Ivy League graduate, though obviously I 'm a biased
| audience).
| cess11 wrote:
| One reason for recruiting from 'high end' unis is the
| kind of social networks those graduates are more likely
| to belong to. They are also more likely to have access to
| more candidates that you would like to evaluate and
| possibly give an offer, compared to 'lower end' unis.
|
| I'm not saying that I think this order of things is jolly
| good, but from the perspective of this kind of business
| sector it makes sense. Personally I avoid finance related
| sectors, a stint at a casino operator to get some
| experience on the CV was enough for me.
| moneywoes wrote:
| How did you find WGU? Has it helped?
| tombert wrote:
| Sort of a difficult question to answer if I'm being
| honest, because I'm kind of a strange outlier case.
|
| I was a dropout for almost a decade, but managed to find
| work at big corporations somehow [1], and the entire time
| I was pretty obsessed with learning CS theory; partly
| because I liked it and partly because it made interviews
| easier. By the time I had decided to finish school and
| enroll in WGU, I already had roughly a bachelors' degree
| of education in CS anyway. And that's not just a pseudo-
| intellectual assertion on my end, I finished all my
| classes in a single term, most classes were completed in
| a week.
|
| I don't think it's helped my job prospects much; I had
| already had senior level positions at Apple and
| Jet.com/Walmart Labs by the time I went back to school,
| and I suspect that they look better on my resume than a
| bachelors in CS from WGU.
|
| (If you're curious, the reason I went back at all was so
| I would be qualified for a PhD program, which as far as I
| can tell universally requires at least a bachelors, and
| usually a masters, so I just wanted to check off a box.
| I'm not 100% sure why I wanted a PhD; I think my brain
| had fetishized professorships and CS research)
|
| So it's tough to answer directly. I think for someone
| starting out today a degree from WGU is better than no
| degree, and I think the education they gave was "just
| fine". If you're ok with not working in Wall Street, it's
| enough to get you to the interview phase. If your goal is
| to work in Wall Street or to become a lawyer, it's
| probably better holding off until you can get into a
| "brand name" school.
|
| I'm happy enough in my current position and they don't
| really care where I went to school, but I do believe that
| they had a firm requirement for a bachelors (I don't
| bother checking), and I like my current gig so it's
| probably worth it.
|
| [1] I dropped out in 2012, which turned out to be just
| about the best time to drop out. It seems like everyone
| on earth suddenly had a smartphone and there was a
| shortage of engineers as a result.
| gadders wrote:
| They might as well say "middle class and above applicants
| only".
|
| You can't claim to have diversity if everyone did the same
| courses in the same schools.
| strikelaserclaw wrote:
| A) usually if you're fresh out of school they filter on your
| school name because the average MIT cs grad is most likely
| better than the average cs grad from university of kentucky.
|
| B) if you have work experience, they filter on where you worked
| because the average google engineer / HFT engineer is probably
| better than your average engineer who works at missouri
| national bank.
|
| C) if you've done something great that everyone knows about
| (like being the author of popular libraries, inventing tools
| that people use), then you can most likely bypass filters A and
| B if you can get in touch with a human recruiter (shouldn't be
| too hard).
|
| For prestigious smaller companies which gets a lot of
| applicants, there is no easy way to reduce the pool without
| doing A and B. It is unfair and what college you go to might
| depend on circumstances beyond your control but if you have
| high ability regardless of what school you went to, you would
| eventually do B or C and get into the prestigious company.
|
| If you don't have high ability and will never do either B or C,
| then they did the right thing filtering out your resume.
|
| In the real world, it doesn't make sense for a company to
| discriminate against a candidate with higher ability just
| because they went to the wrong school (unless the company makes
| money from appearances like law firms, consulting firms or is
| corrupt and entrenched).
| chefkd wrote:
| I think we like to think we live in a equitable society where
| all humans are equal but the older I get what I see & the
| feeling I get from interactions is we're 2 steps removed from
| the feudalism of the old. Mobility across class lines is
| slightly increased but still glacial. Access to schools,
| healthcare, life in general is still determined by where you
| were born.
|
| Could get mad about it but idk it's just the way the world is.
| Do I want to see it change? Yeah but that's because I come from
| seeing my mother work 16 hours just to buy us kids 2 pairs of
| shoes a year someone who went to an Ivy League school might
| have a different take it's just life.
|
| So many things to be mad & stressed about Jane Street only
| hiring Ivy grads doesn't make the list in fact based on the
| world we live in I would expect that
| ecshafer wrote:
| I don't think so. I had interviews there graduating from a SUNY
| school, and I got a fair shake at it I think, just did pass the
| interview.
| justsocrateasin wrote:
| Not true anymore. I went to a shitty state school with no FAANg
| on my resume, and had a Jane Street recruiter slide into my DMs
| last year.
| udev4096 wrote:
| https://archive.ph/d0hvk
| anonyfox wrote:
| If I remember correctly they are also by far the biggest poster
| child for OCaml, right? Blub Paradox at play here?
| yodsanklai wrote:
| They're more than a poster child, they made a lot of
| contributions to the ecosystem. OCaml would be different
| without them.
| cess11 wrote:
| I'm very much not a serious OCaml:er but when I've dabbled
| some in it I got the impression that their "standard library"
| is kind of the de facto standard library.
|
| https://github.com/janestreet/base
| nobleach wrote:
| They had Core. Base is their new attempt at sort of a
| "standard" lib. Not all OCaml-ers use JS libs though. There
| are some Batteries users out there. When I do Advent of
| Code, I almost always try to do it with OCaml's built in
| standard lib.
| cess11 wrote:
| Ah, right, thanks.
| DrBazza wrote:
| Back in the 90s/00s the CSFB quant team went with F#. Immutable
| and functional is reasonable choice. Just not popular.
|
| These days, starting or running a financial business with less
| popular languages is, well, less popular.
| cess11 wrote:
| F# came out in 2005, and was quite limited compared to the
| language it became from 2010 onwards.
| DrBazza wrote:
| Betas were certainly around 2002-03. Though thanks for the
| reminder that .NET was in a beta around 2000, so 90s is
| wrong (that's when I started work so my memory is sketchy
| that far back). CSFB was always a big MS shop and often
| trialled software before public release.
|
| https://fsharp.org/history/hopl-final/hopl-fsharp.pdf
| cess11 wrote:
| Ah, sure, I wouldn't know anything about pre-release
| stuff, I was busy being an unruly adolescent at the time.
| mrweasel wrote:
| Might also be that Jane Street is to OCaml what WhatsApp was to
| Erlang. Many ascribed the success of the small team at WhatsApp
| to their tech-stack, Erlang and FreeBSD. The reality probably
| was that they had hired really smart people, and those people
| choose to use Erlang (because eJabberd), but they could have
| been just as successful using another language.
|
| Yes, Jane Street uses OCaml, they have no reason to stop using
| OCaml, but may very well have been just as successful using
| another language. It's hard to tell, when we don't know the
| full circumstances of why they went with OCaml initially.
| CharlieDigital wrote:
| > but they could have been just as successful using another
| language.
|
| I remember reading about one founder that picked an obscure
| language because in doing so, it self-selected for more
| curious engineers who worked in the languages for fun rather
| than any other practical (re:job) reasons.
|
| His thesis is that finding one really good engineer in said
| language was 1 in 10 (10 interviews to find 1 really good
| engineer) whereas in more commonly used languages like Java,
| JavaScript, etc., it might be 1 in 100
|
| [Edit] https://www.juxt.pro/blog/clojure-in-griffin/
| If we had picked Python, it's very boring and reliable, and
| the same could be said of Java. But you're picking the lowest
| common denominator. I would say high performers, and the best
| programmers are often people that will only work in niche
| languages. The problem is, there are good
| Java programmers, but there are also thousands of terrible
| Java programmers. If you pick the right niche, it's easier to
| find the high-end talent. I think Paul Graham also made a
| very strong case that in a startup, you should be using the
| most powerful language you can, and that is Clojure.
|
| I interviewed with one YC startup that was using ReScript and
| ReasonML on the same principle (I asked the founder why he
| chose Reason).
| strikelaserclaw wrote:
| tons of successful companies (facebook) were founded on
| apps written in php (thought to be one of the lowest common
| denominator of the language world at one time).
| CharlieDigital wrote:
| Facebook, even early on, wasn't really what I would
| consider very technical in both engineering and domain
| complexity.
|
| When FB started to grow, it needed the HipHop VM[0] to
| make it scalable beyond PHP. I'd agree that PHP _is_ a
| lowest common denominator and FB eventually needed to
| move beyond it to get to the next level.
|
| [0] https://en.wikipedia.org/wiki/HHVM
| disgruntledphd2 wrote:
| I dunno man, they managed to mostly stay up during times
| of extreme growth, and were able to scale their graph
| stuff (people you may know etc) in a way that competing
| companies (i.e. Friendster) couldn't.
|
| The domain probably isn't that complicated, but the
| infrastructure certainly was (and this was all pre-cloud
| so they built it themselves).
|
| But yeah, FB's success came from a base level of keeping
| the site up and incredibly good tactics to drive growth
| and distribution.
| disgruntledphd2 wrote:
| > , it needed the HipHop VM[0] to make it scalable beyond
| PHP.
|
| Also, it goes Php -> HipHop (compile PHP to C++) -> HHVM
| (compile PHP to a virtual machine running ASM).
| hoosieree wrote:
| Talented people are valuable _in general_ which gives them
| bargaining power so they can demand to use their preferred
| tech _regardless of whether that tech is niche or not_.
|
| I generally agree with the notion that talented folks are
| more likely to explore niche tech. Just be careful making
| the leap from "they prefer niche X" to "therefore they are
| talented".
|
| Two anecdotes:
|
| 1. I'm an average programmer who likes niche tech.
|
| 2. My friend is 10x more talented than me, but he likes
| mainstream tech.
| CharlieDigital wrote:
| > Just be careful making the leap from "they prefer niche
| X" to "therefore they are talented".
|
| Not my approach, to be sure :)
|
| I think I have a pretty good heuristic for finding
| curious and inquisitive people that doesn't rely on
| esoteric tech stacks.
|
| My sense is that a lot of engineering teams have lost
| their way so the only mechanism they can use now are
| convoluted leetcode style interviews instead to filter
| out _Senior Java Dev Candidate 43_ versus _Senior Java
| Dev Candidate 96_.
|
| I write a little about this here: _Your Interview Process
| is Too Damn Long (and How to Fix It)_
| (https://chrlschn.dev/blog/2023/10/your-interview-
| process-is-...)
| TremendousJudge wrote:
| In my experience the most used mechanism is "I worked
| with this person before, they're pretty good, give them a
| call"
| mywittyname wrote:
| > but they could have been just as successful using another
| language.
|
| I don't claim to be a rockstar developer or anything close.
| But my capabilities and efficiency as a developer are tightly
| coupled to the tech stack I use (not just language).
|
| I moved from a job where I chose my own tech stack that I
| iterated over several years to one where I'm forced to use
| (IMHO) tools that are poorly suited to my work, and I'd say
| the quality and volume of my work has dropped by at least
| 10x.
|
| So I think it's both. You need smart people, but they also
| need to be using the right tools for the job.
| myaccountonhn wrote:
| It's very hard to determine if they succeeded because of or
| despite of in any quantified way. WhatsApp, Viaweb, Jane
| Street, NoRedInk are examples of where they succeeded with a
| smaller language and none of them afaik blamed the language
| but praised it.
|
| However, I think if you are a company doing something boring
| and that can only pay average, then having an interesting
| tech stack (including a nice language), hiring globally and
| having good benefits might give you a venue to compete for
| talent. You'll need some kind of strategy.
| yen223 wrote:
| I've only ever heard of Jane Street because they're one of the
| few companies that did OCaml.
| citizen_friend wrote:
| See. That's how they have marketed to this demographic.
| coldtea wrote:
| In what way would the Blub paradox be at play?
|
| The paradox being: developer familiar with programming
| languages of level of power N doesn't recognize that languages
| of level N+ are better (more powerful expressively), only that
| N- are lesser.
| citizen_friend wrote:
| It's just developer marketing.
| padjo wrote:
| SBF got his start there right?
| sporeray wrote:
| Yes, paid quite a lot of money to flip coins lol. There is a
| pretty big section about his time there in Michael Lewis's new
| book "Going Infinite".
| henrik_w wrote:
| That was the part of the book I found most interesting
| (although the whole book is a good and interesting read)
| roland35 wrote:
| Sure did! The rest is history...
| pityJuke wrote:
| (It's briefly mentioned in the article, in the risk section)
| hendzen wrote:
| Jane Street made 4.4bn net income in Q1 2024 w/ 2600 employees.
|
| Tether made 4.5bn net income in Q1 2024 w/ probably <50
| employees.
| actionfromafar wrote:
| There's a non-zero chance one of the companies is mostly legal.
| Ekaros wrote:
| I would put that to 100%... You don't make that much money
| without breaking at least some laws from time to time.
| vintermann wrote:
| Well, sometimes they only do stuff that _should_ be
| illegal.
|
| Superfast arbitrage, which is Jane Street's main thing as
| far as I understand, doesn't really produce anything of
| value to humanity. Yeah, I guess the contributions to OCaml
| are worth something, but maybe not 10 billion?
| RockyMcNuts wrote:
| well, running the financial system is overpaid work but
| it's the high-order bit in the current form of
| capitalism.
|
| it's the operating system, some people might think it's a
| tax on everything, some people might think it provides
| the foundation to produce everything of value.
|
| similarly, Google is the high-order-bit in the
| information or content economy, the creators get
| underpaid, the people who do ad optimization get
| overpaid.
|
| no financial markets -> no IPOs -> no VC -> no Google and
| Silicon Valley as we know it.
|
| the closer you are to the money and the transactions, and
| the high-order bit, the better the opportunities to
| redirect and organize to your advantage, and the more you
| get paid.
| alpark3 wrote:
| They're not that good at arb. Real arb doesn't even
| really exist anymore. Even when it does, it's not JS that
| closes it. They market make, which is different.
| Galanwe wrote:
| You don't make 10B returns on HFT alone.
|
| The characteristics of short prediction horizon
| strategies like in HFT give you an amazing sharpe, but
| you're predicting small returns.
|
| To scale returns you need to invest more, which means
| higher market impact, which means longer prediction
| horizon, on larger price moves.
| vgatherps wrote:
| Jane Street is one of the slower market making firms and
| generates a significant share of revenue from being
| everywhere on everything (MUCH easier said than done).
| You want to trade some Canadian lumber ETF? Jane Street
| will be there. Some bond product with constituents that
| trade across 3 different trading sessions? Jane Street's
| active in that market. None of that is to say they don't
| have any presence in major products or don't have real
| short term alphas/edges of course.
|
| They've never been at the forefront of latency games,
| like Jane Street isn't the firm sweeping equity markets
| since they have the fastest radio network out of CME
| (dubious value) or getting their quotes first-in-line
| every time.
| blackhawkC17 wrote:
| Well, Tether only needs to hold treasuries and collect
| quarterly interest payments. They don't need much staff, at
| least if they haven't looted the treasuries SBF style.
| smnplk wrote:
| I'd be surprised if they hold 20% of non-crypto assets.
| keyle wrote:
| I love them because they keep the OCaml dream alive, but any
| company shouldn't have this kind of reach, especially in the
| realm of automation. This probably won't end well...
|
| Meanwhile I'd love to know what their edge is... It's probably
| more than OCaml, although... ;)
| UK-Al05 wrote:
| I think OCaml is more of symptom of the people who they hire.
| Most companies don't want to hire OCaml and Haskellers. They
| fear they would be too expensive, and requires clear thinking
| so you can't hire bottom of the bucket devs.
|
| If you want to hire the best and willing to pay that is no
| longer a concern
| karma_pharmer wrote:
| I interviewed with them, a long long long time ago.
|
| They use OCaml because it is explainable. Which it is. They
| use it like a non-lazy version of Haskell -- side effects are
| used rarely if ever. So there's no nonlocal behavior in the
| code, which makes it easy to reason about. And that kinda
| matters when a lot of money is at stake.
|
| Incidentally, Standard Chartered has their own compiler for
| Haskell, without the laziness. The group is led by the guy
| famous for Cayenne (the first dependently typed Haskell
| dialect).
| yodsanklai wrote:
| > Most companies don't want to hire OCaml and Haskellers
|
| Most companies don't even know that these are programming
| languages. Also don't assume people interested in these
| languages are "the best". Regarding JS, this is all hearsay,
| but I think nowadays they hire good profiles (competitive
| programmers / olympiad winner / top graduates from
| prestigious schools), ask them hard leetcode questions, and
| teach them OCaml (which anybody can learn, not particularly
| hard. Their talent pool isn't restricted to the OCaml
| community, as it used to be when they were less famous,
| except for niche use case (compiler work and so on...)
| UK-Al05 wrote:
| I'm not saying people interested in OCaml are the best. I'm
| saying you don't have to worry about smart people being
| incapable of understanding OCaml.
|
| You got the direction the wrong way around.
|
| Ask to introduce OCaml at any company. The first thing is
| they're worried about is not being able to find people. To
| which the answer is to train them. But then they're worried
| some people just won't be able to learn ocaml quickly
| enough. To which my answer is hire people who are good
| enough to learn it quickly. But then they get worried those
| people are expensive. Ultimately it comes down to not being
| willing to pay.
| sevagh wrote:
| I think you equating people that aren't OCaml or Jane
| Street caliber as "bottom of the bucket" was a touch
| inflammatory.
| UK-Al05 wrote:
| Companies that want to maintain the ability to outsource
| or hire cheap developers if push comes to shove is
| actually pretty common. They want commodity labour.
| DaiPlusPlus wrote:
| To be fair, another reason for avoiding OCaml, or other
| kinds of almost-esoteric tooling is a business need for
| longevity of support and of the ecosystem: if you choose
| something like Java you have a reasonable belief that, at
| any point in the next 20 years, if something breaks then
| you'll be able to call a phone-number and pay through the
| nose to get it working again. Companies don't mind paying
| large amounts of money for an expert, provided those
| experts are available. But in 2024 try finding an expert
| for some dBase 4GL system from 1998 that only runs on
| AS400.
| bmoxb wrote:
| I interviewed there and can confirm they don't require you
| to know any OCaml (though I did have some Haskell on my CV
| - I don't know if that was a factor in hearing back or
| not). The questions are LC-adjacent but the interview is
| structured such that each question builds on the previous
| one.
| bko wrote:
| What kind of reach? Just making a lot of money?From the
| article, it looks like they make a lot from market making in
| ETFs and similar. Thats an extremely competitive market that is
| necessarily a race to the bottom in terms of pricing
| Ntrails wrote:
| > From the article, it looks like they make a lot from market
| making in ETFs and similar. Thats an extremely competitive
| market that is necessarily a race to the bottom in terms of
| pricing
|
| They are not making their money market making equity etfs
| afaik, mostly bonds. A slightly different game with a much
| higher barrier to entry etc
| Smaug123 wrote:
| > At the end of 2023, Jane Street employed 2631 people
|
| > About 80 per cent of the company's capital comes from employee
| equity, which has swelled to $21.3bn at the end of 2023
|
| o.O
| llm_trw wrote:
| That works out to 8 million per person on average.
|
| I'd be interested to see if the Pareto distribution holds here
| as well, namely that 1% of employees (26) hold half the wealth
| ($10b).
| baq wrote:
| (PSA: 50/1 is approximately the same distribution as 80/20)
| llm_trw wrote:
| It is the same distribution, just makes the point more
| clearly.
| infecto wrote:
| "Jane Street has 40 "equity unit holders on a full-time basis
| and in good standing", with an average tenure of 16 years" -
| I suspect a large portion of it would come from those 40 but
| that is purely a guess.
| gruez wrote:
| I thought the Pareto distribution was most famously
| associated with 80-20? Of course you can change a to get
| whatever ratio you want but this is the first time I heard of
| the 50-1 ratio being used.
| zmgsabst wrote:
| They're the same:
|
| 20% of 20% of 20% (or 0.8%) of people will hold 80% of 80%
| of 80% (or 51.2%) of the wealth.
| gpderetta wrote:
| A power-law distribution probably describes it better.
| queuebert wrote:
| Pareto is a power-law distribution.
| coldtea wrote:
| The Pareto can be applied recursively. If 20% of the people
| have 80% of the wealth, then 20% of them will have 80% of
| that 80% (64%) and so on
| dchftcs wrote:
| It probably includes the founding partners, so it might be
| that ~0.15% hold more than half.
| chii wrote:
| only 1 founding partner is still there apparently (from the
| article). Rob Granieri
| ethbr1 wrote:
| It makes you wonder if there's a retirement-encouraged
| culture for inactive partners.
|
| Which is probably what you'd want in a high-performance
| firm, less everyone look at the absent top level
| extractors and it turn into a law firm.
| dchftcs wrote:
| Equity holders are probably forever, and the incentive
| problems are a hard thing to solve. But you won't be a
| founder or early joiner if you're not allowed to keep
| your equity anyway.
|
| Fortunately it doesn't take that much to get top talent,
| because so many other companies underpay. Jane Street
| only has to pay out a small fraction of their PnL and
| doesn't even need to have a non-compete.
| chii wrote:
| with a profit margin at 70%, they can afford very high
| pay.
|
| And the equity holders would get diluted a bit when new
| employees are offered equity, but looking at the rate of
| profitability, each new employee more than earn their
| share in equity, even at the high end. Therefore, it is
| in fact, in the existing equity holder's interest to get
| diluted a bit to hire these employees, who would produce
| way more value (and thus increase the total value)
| compared to the loss in dilution!
| AJRF wrote:
| Don't you mean Zipfian distribution?
| mywittyname wrote:
| Zipf is an inverse power law.
| ProjectArcturis wrote:
| Hedge fund comp is extremely skewed. When I worked at one, in
| good years my boss made more than 10x what I made, and I made
| about 10x what my reports made.
| bogtog wrote:
| Are you telling me that one of American capitalism's peaks is
| basically a worker collective?
| lupire wrote:
| Unknown but unlikely. Doubtful that ownership shares are
| anywhere near equal.
| paxys wrote:
| Is Google a worker collective just because new employees are
| thrown a handful of shares?
| MichaelZuo wrote:
| If 80% of Google was employee owned, then it would be.
| paxys wrote:
| Plenty of companies are "employee owned" because the
| founders control the majority of shares. One person or a
| small group of people - whether they are employees or not
| - having total decision making power is the opposite of
| what worker collective means.
| MichaelZuo wrote:
| Who decided on that definition?
|
| In my books share ownership can be unequal, so long as
| the bottom rung still have a few shares each.
| paxys wrote:
| Anyone can make up their own definition, but there are
| also some standard ones - e.g.
| https://en.wikipedia.org/wiki/Cooperative and
| https://en.wikipedia.org/wiki/Worker_cooperative
| MichaelZuo wrote:
| Like I said, please provide actual names or organizations
| with credible authority, such as the OED, and link the
| source.
|
| EDIT: I'm not going to do this work for you and dig
| through all the places cited at the bottom to see if
| there's some source with that credible authority that
| proposes such a definition.
| JustLurking2022 wrote:
| Depends on who you count as employees - Sergey? Larry?
| fire_lake wrote:
| Capitalism is all about allowing many different
| organisational structures where the fitness function is
| profitability.
|
| Where it goes wrong is when the regulator fails to stop foul
| play...
| acegopher wrote:
| It also went wrong using only profitability as the only
| measure. Obviously an unprofitable company isn't long-term
| sustainable, but a maximally profitable company might not
| be either, as a company exists within a society and on a
| planet with limited resources.
| fire_lake wrote:
| Such a company, with no long term plan, wouldn't be able
| to raise capital.
| bryanlarsen wrote:
| In a worker collective every worker has a single vote and
| workers are paid proportional to the value they add.
|
| Jane Street shares and profits are proportional to the
| capital you invest/accumulate.
| DaiPlusPlus wrote:
| > proportional to the value they add
|
| How do you quantify, or even loosely, determine that?
|
| What about ancillary workers who might not add any
| significant value to the (e.g. office janitor or HR) but
| supposing there's a serious janitor or HR shortage then the
| org will still have to pay enough to attract someone, but
| what they pay is outside of their control and unrelated to
| the actual value to the company. And even in a worker-owned
| cooperative there's still going to be in-groups and out-
| groups, and the in-group is incentivised to pay the out-
| group as little as possible as to maximise their own
| returns.
| collegeburner wrote:
| it's not a collective per se but employees are certainly well
| paid. because they are highly skilled, are not easily
| replaced, and could take secrets elsewhere.
|
| commodities trading houses tend to follow this model too
| though that is changing a bit.
|
| i remember having this discussion with a friend after he sent
| me a richard wolff video. nothing about our system stops
| coops from flourishing. one of my favorite retailers, REI, is
| a member-owned co-op. publix, the beloved florida grocer, is
| employee-owned.
| nolongerthere wrote:
| I know you're kinda joking but, The problem with socialism
| isn't the voluntary organizations that people can join or
| leave at will, it's the forced involuntary labor that is
| always brought about. Capitalism is about voluntary mutually
| beneficial partnerships which this is.
| JumpCrisscross wrote:
| > _one of American capitalism 's peaks is basically a worker
| collective?_
|
| Finance tends to pay its workers better than shareholders--
| most banks' trading and IB groups pay out more than 50% of
| profits to workers.
| paxys wrote:
| A little further down:
|
| > The real money is at the top. The bond prospectus reveals
| that Jane Street has 40 "equity unit holders on a full-time
| basis and in good standing", with an average tenure of 16
| years. Among those there will be at least a handful of
| billionaires, even if no Jane Streeter appears on any rich
| lists.
|
| Sounds like any other partnership. A few people at the top are
| providing the equity and getting a profit share, and the
| thousands under them are getting salaries.
| ethbr1 wrote:
| > _and the thousands under them are getting salaries._
|
| The difference is that these thousands also get to invest in
| Jane Street, which seems a pretty profitable investment (70%
| margins, etc).
| paxys wrote:
| Typically at such companies you have to be at the very top
| of the hierarchy to be able to buy in and get a slice of
| the profits. It is very unlikely that rank and file
| employees are able to participate, at least at a scale
| larger than, say, a Google employee buying some extra
| shares.
| robertlagrant wrote:
| If you can afford to buy in to a company that valuable
| then you probably aren't a regular employee, yes.
| ethbr1 wrote:
| Afaik (not my field, but well-docunented) prop shops like
| Jane Street don't take outside money.
|
| So they're incentivized to allow as many of their
| employees to invest as possible.
| __oh_es wrote:
| $100k buy in at the hedgefund I know. Its a big figure
| for most but starting salaries, friends & family, and
| personal loans will get you there.
|
| >20% return is quite easy to justify. You're also looking
| at a 50%-200% annual bonus, mostly leaning to the higher
| end of the range.
|
| Its a very different world!
| mywittyname wrote:
| I would think JS pays most of their employees well enough
| that the buy in can be waived, or as part of total comp
| that vests over some years.
| Scoundreller wrote:
| Big Canadian bank I know had something like a requirement
| to own $450k of shares to be a board member. But they
| sliding scale exempted you for your first 5 years and
| gave you $90k in shares each year, so as long as number
| go up, there was no actual outlay.
| barneygale wrote:
| > $100k buy in at the hedgefund I know. Its a big figure
| for most but starting salaries, friends & family, and
| personal loans will get you there.
|
| Surely this is a HN culture bubble? Very few people can
| borrow tens of thousands of dollars from family and
| friends _to lend to a hedge fund_. Not only would I be
| refused, I 'd damage friendships by exposing the moral
| vacuum at my core.
| govg wrote:
| It has more to do with the nature of the industry and
| firm. If your TC yearly is all cash and exceeds 500k,
| asking 100k of that as buy in is not too different from
| being granted stock options as an outcome. They could
| just reduce your TC by 100k one year and replace it with
| equity in the pool.
| caddemon wrote:
| Being able to borrow that amount might be a bubble, but
| depending on the fund I don't think it would damage
| friendships at all. If you had access to the internal
| Renaissance fund for example I think your friends would
| be happy to get in on that.
| alxhill wrote:
| For what it's worth, a friend of mine is a lawyer in a
| well-known hedge fund and he gets access to their funds
| too (funds that would not otherwise be accessible without
| making a substantially larger investment I believe).
| wuj wrote:
| Rentech uses this model too. The equity-to-salary ratio of an
| employee increases the longer they remain at the firm. It's
| for incentivizing employees to stick with the firm in the
| long run such that they don't work for any other firms and
| become a competitor (especially true in trading given the
| small population of talents).
| chronic830021 wrote:
| > Double the profit per employee than Google
|
| > Average TC of 900K
|
| > Several unranked billionaires
|
| it makes even OpenAI / Meta ML SWEs look underpaid
| yodsanklai wrote:
| This is the average, it'd be interesting to know what's the
| median for a SWE is. Also, some high-level SWE do make 900K at
| Google and others. Maybe for a similar set of skills, JS
| doesn't pay (much) more than Meta or Google?
| chronic830021 wrote:
| > This is the average, it'd be interesting to know what's the
| median for a SWE is.
|
| 900k is average including janitors and HR.
|
| Median for SWE most definitely over $1 million. Turnover of
| 6%? No way people stick around "only" making 500-600k new
| grad comp. Check levels.fyi
|
| > Also, some high-level SWE do make 900K at Google and others
|
| And some high-level SWEs at JS make 9 figures, not 900k.
| basil-rash wrote:
| Janitorial staff is almost certainly subcontracted.
| walthamstow wrote:
| I'd agree for any other company or even public body, but
| I'd bet that JS prefer to keep it all in-house. They are
| extremely secretive.
| lupire wrote:
| Some high level SWEs at Google are billionaires.
| sullyreed8 wrote:
| > Some high level SWEs at Google are billionaires.
|
| The entire tech _industry_ has fewer billionaires than
| quant finance.
|
| If you are ambitious, tech SWE is a bad deal.
| lotsofpulp wrote:
| The tech billionaires are far richer than quant finance
| billionaires.
|
| And I would bet that tech SWE has a far higher
| probability of launching you into $10M+ range than quant
| finance.
|
| I don't know that a few more single digit billionaires
| (if that is even true) puts quant finance ahead of tech
| SWE in terms of potential rewards for the "ambitious".
|
| Also, quality of life is far better for tech SWE.
| bradlys wrote:
| Getting into quant finance is not very common. Getting
| into tech SWE - even FAANG - is much more common. There
| are way more people working as SWE in tech than as
| quants.
|
| I've rarely met anyone who is a quant and doesn't have a
| PhD. That already narrows down the field quite a bit.
| chronic739301 wrote:
| > And I would bet that tech SWE has a far higher
| probability of launching you into $10M+ range than quant
| finance
|
| $1B net worth? Google has more SWEs than the entire quant
| finance industry globally. Yet Google could only produce
| what, 4 billionaires?
|
| $10M TC at Google? That's at most 500 VPs out of 150,000
| employees. That's 0.3%. Not good odds. More than 7 people
| (0.3% x 2500) at Jane Street are making $10M+...
|
| Same logic applies to $1M TC. Tech has okay chances, but
| quant is simply multiples better. Only if you got lucky
| at Tesla or NVIDIA. Otherwise your L5-E5 comp maxes at
| 600-800k including RSU appreciation.
|
| Then for junior/new grad, quant firms win again. 300-500k
| quant SWE offers vs 200-300k in tech.
|
| Hell, even for summer internships, quant trading firms
| pay SWE interns $20-25k/month. Also on levels.fyi
| hcks wrote:
| Highly doubt that
| yodsanklai wrote:
| FWIW I'm getting contacted regularly by recruiters working
| with JS in London. When enquired about salary, from their
| experience, people with my experience can get about
| PS350k+. It's higher than an L6 SWE at Google/Meta in
| London, but not outrageously so.
| SkipperCat wrote:
| SWE will probably make between 250-500k. Quants who can come up
| with profitable trading strategies can make a lot more.
| Managers of trading teams can make over 1MM and sometime a lot
| over 1MM depending on how profitable their teams perform.
|
| SWE who have deep subject matter experience are super valuable
| to these firms. Folks who understand how to write low latency
| code, FPGA work and other stuff like that. But the real money
| is in figuring how "how and what" to trade. Once that's done,
| the SWEs can bang out the code.
| mayguo wrote:
| > SWE will probably make between 250-500k.
|
| New grad SWE is 400K
|
| https://www.levels.fyi/companies/jane-
| street/salaries/softwa...
|
| And levels.fyi not very accurate because 2nd year bonus is
| much larger than 1st year bonus in offer letter.
|
| Quants/traders can hit $1M with 5 YOE not too difficult.
| Portfolio managers (similar to EM in tech) definitely $1M,
| sometimes $10M.
| subsubzero wrote:
| That is quite good and comparable to IB(investment banker)
| salaries. Meaning a few years ago $200k by 22, and
| incrementing $100k a year with $1M by age 30, and $10M by
| age 40 or so. The starting salaries out of college are now
| about $350k. My question is I wonder if the upward salary
| trajectory is similar to that IB track, this is assuming
| the employee has a somewhat upward career trajectory; does
| Jane street cap out folks at a certain level?
| SkipperCat wrote:
| From my experience, the best way to get a pay increase is
| to code software for things closer to the trading system.
| Write code that makes a trading app faster and increases
| PnL, you'll make more money via bonuses. If you're
| writing back office code doing data loading, trade
| reconciliation or other "housekeeping" stuff, you'll not
| see the same comp.
|
| Because of this, getting a SWE role that is assigned to a
| trading team is highly desired.
| jfrbfbreudh wrote:
| I work at a competing firm and our SWE new grads make
| $420-470k (including signing bonus).
|
| JS pays their new grads similarly, just a tiny bit lower.
| notagoodidea wrote:
| I guess, I live in the wrong country and wrong profession
| if I want to make that much of money. This is an stupidly
| gigantic amount of money. I know that I will not make this
| much gross any year of my life, actually this is around 7-8
| years of my gross annual salary.. I know US vs UE etc.
| Still this is crazy. Not sure how UE salary in the same
| field/category compares.
| singhuler wrote:
| Fortunately for you money doesn't buy happiness and life
| has the same end point no matter how rich you are ::)
| pcrh wrote:
| This isn't much US vs Europe, as industry sector. You can
| probably make _comparable_ amounts of money in the same
| sectors in London, Amsterdam or Paris.
| andoando wrote:
| Hire me and ill be your slave
| paxys wrote:
| "Average" is a meaningless number here considering the equity
| partners are getting ~100% of the profits. It is very different
| from the shareholder model of large tech companies, so a direct
| comparison is pointless.
| belinder wrote:
| Why do they say 179,000 million instead of 179 billion? Is that
| common in their industry?
| infecto wrote:
| Pretty common in finance across the board to use consistent
| units and to not use decimals. So in this case the following
| sentences mention $10 million, you would not want to say $0.10
| billion. It depends on whats being presented of course but in
| large numbers like these, decimals make it harder to read.
| zie wrote:
| This! Also because people regularly screw up units(forgetting
| to convert, etc), so if you keep them all the same, it's a
| touch harder to screw up.
| llm_trw wrote:
| Why do we say 17,000 kilometers instead of 17 megameters?
| mort96 wrote:
| I want us to start using megameters. And gigameters.
|
| And instead of (metric) tons, I want megagrams. No kilotons;
| gigagrams.
| llm_trw wrote:
| Be the change you want to see.
|
| I remember the first time I got those units out of gnu
| units on the command line scratching my head wondering why
| I'd never used them before and why it was using them at the
| same time.
| zmgsabst wrote:
| I'm personally partial to attolightyears (about 1cm).
| Chris2048 wrote:
| Surely you'd use the base unit of time, the second
| (lightseconds)?
|
| atto-lightyear = 1e-18 lightyear
|
| lightyear = 3.156e+7 lightsecond
|
| Hence, atto-lightyear = 3.156e-11 lightsecond = 31.56
| pico-lightsecond
| walthamstow wrote:
| Brewers introduced me to this with hectolitres
| darkwater wrote:
| Hectolitres and hectograms are used fairly often (the
| latter, daily) in Italian, for example.
| walthamstow wrote:
| Hectolitre is 100 litres, not 100ml, but hectogram is
| 100g, not 100kg? Very confusing!
| mort96 wrote:
| I mean Hecto = 100 Hectoliter =
| 100 litres Hectogram = 100 grams
| Kilo = 1000 Kiloliter = 1000 litres
| Kilogram = 1000 grams
|
| It doesn't look that confusing?
| jagger27 wrote:
| Well yeah, litres and grams are the base units. Just
| because 1ml is 1g of water doesn't change how SI prefixes
| work.
| walthamstow wrote:
| I would have thought if gram is the base unit for weight
| then millilitre is the base for volume, but I must be
| wrong
| lambdaxyzw wrote:
| That's actually a good question. Why? We have nanometets,
| picometers, centimeters, decimeters, kilometers, why not
| megameters?
| ragebol wrote:
| I wonder why too. Same for weights: why have a ton
| (1000/kilo kilograms) if you can have a megagram (which is
| the weight of 1 cubic meter of water at the right
| conditions)
|
| The only 'commonly' used unit of measure larger than a
| kilometer is a light year, at least that I can think of.
| Maybe a Astronomical Unit, but not 'common' I suppose.
| datadrivenangel wrote:
| The mile is larger than a kilometer.
|
| But it shouldn't be common.
| calgoo wrote:
| In Sweden, a mile is 10km, not 1.6... so there are other
| measures that exist, just not in all countries.
| jagger27 wrote:
| I think in terms of things commonly measured on Earth we
| don't benefit much from the jump to megametres. The
| diameter of this planet is 12,742 km. Does it help much
| to say 12.7 megametres? Not really. Off planet the
| distances between objects are far beyond megametres. AU,
| parsec, and lightyears make much more sense.
| dorfsmay wrote:
| Most people prefer habits/conventions over logic.
|
| I've had people get angry when I tried to use Mm (mega metre)
| or ask why using some currencies symbols before the number
| when all symbols for all other units are used after.
| queuebert wrote:
| Scientists don't use either. If using SI units, they would
| say 1.7 x 10^7 m, or 1.7e7 in code, which is even shorter.
| mattkrause wrote:
| In practice, people tend to use units that match the
| "natural scale" of the data.
|
| If the data consists of electrical potentials between
| 0.0000001 and 0.0002 V, it's way easier to think about it
| as microvolts, especially if any other is in a
| complementary scale.
| queuebert wrote:
| Especially in conversation, but calculations are
| typically done in SI units to avoid mistakes.
|
| https://en.wikipedia.org/wiki/Foe_(unit)
|
| https://en.wikipedia.org/wiki/Barn_(unit)
| Chris2048 wrote:
| perhaps we should use kilo-millions?
| John23832 wrote:
| FT does finance speak. Tranches are in millions more regularly
| than billions.
| flipbrad wrote:
| Billion has wildly different meanings.
| https://en.m.wikipedia.org/wiki/Billion
| lambdaxyzw wrote:
| I disagree, as a native speaker of a language where "bilion"
| means 10^12, it's clear to me that "billion" means 10^9 when
| used in English text. So I disagree that is ambiguous. But
| maybe that's wiem that way to make sure foreigners with poor
| understanding of English don't read it incorrectly, because I
| guess it gets confusing (even journalists sometimes make a
| mistake of translating that wrong).
| AnimalMuppet wrote:
| "Billion" meant 10^12 _in England_ until... some time in
| the 1950s, I think? But 10^9 in the USA.
|
| So there was confusion, even in the English-speaking world.
| Was. If I understand correctly, England has adopted 10^9,
| and so now there is no ambiguity.
| justin66 wrote:
| Who knew? But that article indicates America has used the
| short scale (base ten) forever and the UK has used it since
| 1974, so let's just assume that FT (an English language
| paper) is not worried about confusion regarding the meaning
| of 'billion' and there's a different norm at work here.
| Barrin92 wrote:
| >let's just assume that FT (an English language paper) is
| not worried about confusion
|
| The FT has a big international audience. As a German reader
| where a "Billion" is still 10^12 it does sometimes trip me
| up a little. So I at least find it useful.
| justin66 wrote:
| That's a decent point, but what I don't get is, when I do
| a Google Translate from English to German for "billion,"
| I get "Milliarde." Is the concern that German readers,
| reading the article in translation to German, will be
| confused? It would seem like the German readers reading
| the English article would understand.
|
| Not trying to argue any point (I mean honestly...), just
| trying to understand the German POV here, which is
| interesting.
| peeters wrote:
| > the UK has used it since 1974, so let's just assume that
| FT (an English language paper) is not worried about
| confusion
|
| Anyone aged around 60 or older would have been learning
| these numbers before 1974, and that's a significant overlap
| with FT's audience. You are dismissing this as if it's
| Middle English. It's an entirely reasonable explanation, at
| least one that shouldn't be dismissed.
| justin66 wrote:
| Fair point.
| mywittyname wrote:
| And there was a transition period where younger people
| need to know that the term could be ambiguous. It's not
| like they burned all the maths texts in 1974 and replaced
| them with newer literature. Older text books were
| probably in use into the 80s and perhaps the 90s.
|
| From the writing of the era, it's clear this new
| definition for million was not popular, and many chose to
| continue using the "British meaning." So it was probably
| in colloquial use for quite a while, and the transitional
| term "1 thousand million" became the proper style.
| hoosieree wrote:
| Prefer "zillion" or "kajillion" to avoid these sorts of
| pitfalls.
| pi-rat wrote:
| I worked for a FX market maker, and we just used "yards".
|
| Removes any confusion for european and american
| collaboration.
|
| Got old roots dating back to cockney trading slang: "The
| Old Lady just bought half a yard of cable"
| spatulon wrote:
| Until a few decades ago, the term 'billion' actually meant one
| million million (1e12) in the UK, rather than the now commonly-
| accepted meaning of one thousand million (1e9). As a British
| paper, the FT may simply be trying to avoid the ambiguity.
| kqr wrote:
| Because 179,000 million is a 179 milliard, not 179 billion,
| which would be 179,000 milliard!
| sgt wrote:
| Whenever OCaml stories popped up about Jane Street, I always
| figured they were about 30-40 employees by now. 2613 people?!
| cess11 wrote:
| I imagine most of those use the tools built by their
| developers, and do a lot of paper shuffling and analytical work
| supported by the software.
| geodel wrote:
| Well 30-40 or more would be just needed to maintain OCaml
| codebase. Unless basic unit of bonus, salary, buying, selling,
| vendor payments, building maintenance and so on is OCaml lines
| of code, I would have guessed ~1000 people for sure.
| andrew_eu wrote:
| I often discuss Jane Street as a great model of employee
| branding. They do well placed adverts/sponsorships (e.g. Standup
| Maths[0]), they produce a quite decent quality podcast (Signals
| and Threads [1]), and they have consistent monthly puzzles [2].
| That level of investment in branding only makes sense, I think,
| at a large size. I'm kind of surprised they only have ~2500
| people.
|
| [0] https://www.youtube.com/user/standupmaths [1]
| https://signalsandthreads.com/ [2]
| https://www.janestreet.com/puzzles/current-puzzle/
| brightball wrote:
| I'd love to get in touch with somebody from their marketing
| department.
| LudwigNagasena wrote:
| Their revenue per employee is probably similar to revenue of a
| single mid size company.
| herewego wrote:
| I can assure you it's much higher. Much higher.
| syntaxing wrote:
| They made 10B net in 2023 (supposedly)...that's a ballpark of
| 4M net revenue per employee. What mid size company makes 4M
| net per employee?!
| yohannparis wrote:
| They meant each employee as revenue equivalent of one
| entire mid-size company.
| queuebert wrote:
| GOOG, which has a reputation of being slightly bloated,
| made $138 billion in revenue across 140,000 employees.
| That's $2.3 million per employee.
| xen0 wrote:
| More like 180,000 full time employees, and probably at
| least that number again in external and temporary
| contractors etc.
| gollum999 wrote:
| From the article:
|
| > At the end of 2023. Jane Street employed 2,631 people, so
| that equates to almost $4mn of net revenue per head on
| average. In adjusted EBITDA, it comes to $2.83mn per employee
| (or nearly $22mn for each of the 482 traders actual traders
| at Jane Street.)
|
| And regarding compensation:
|
| > Given Jane Street's disclosed compensation and benefits of
| $2.4bn last year, this works out to over $900k for each
| employee on average.
| nickpeterson wrote:
| I'd imagine it's closer to giving most employees 2-300k and
| a few employees several million though
| ethagnawl wrote:
| They used to be very active in the NYC Meetup scene, too. ~~I
| think I visited at least two of their offices and the second
| was was stunning. It was far south enough and high enough that
| there was a nearly unobstructed 200deg view of the southern end
| of Manhattan, both rivers, etc. It was also beautifully
| designed and had an obligatorily huge, open, stocked kitchen.~~
| (This was actually Two Sigma.) They were also using exotic tech
| back then, too, like OCaml, which is itself a form of marketing
| and helps with recruitment.
|
| Moral qualms aside, it must be a fascinating place to work.
| detourdog wrote:
| I used to ride the train with someone at Two Sigma. His hobby
| was working on better NTP boxes.
| tikhonj wrote:
| Jane Street has been doing this since they were _much_ smaller.
| I interned there when they had like 300 people, and they were
| actively cultivating a great brand as an employer back then too
| --and looks like they 've really made it work over the last
| decade!
|
| My impression with them in general was that they were willing
| to do lots of things that did not "conventionally" make sense
| at their size, and those things paid off. The internship
| program, for example, was relatively large in comparison to the
| size of the company at the time ([?]50 interns?) and had lots
| of structure (events/talks/classes/group projects/etc) like you
| would expect from a big tech company, not from a 300-person
| firm.
|
| They were also willing to build _a lot_ of tools in-house like
| their own build system[1], their own code reviews system[2],
| etc. Most people would see this as wasteful NIH but I 'm
| convinced it was a net benefit for them--they managed to be so
| productive in an absolute sense and especially on a per-
| engineer basis _because_ they were willing to build so much
| themselves, not despite it. I 'm sure the same thing applied to
| their recruiting efforts.
|
| The biggest thing I took away from my internship was how much
| conventional wisdom in the software world was not necessary or
| true.
|
| [1]: First Jenga, now Dune
|
| [2]: Here's a neat talk on how they do code review at Jane
| Street: https://www.janestreet.com/tech-talks/janestreet-code-
| review...
| physicles wrote:
| > how much conventional wisdom in the software world was not
| necessary or true.
|
| Do you remember any specifics?
|
| I'm also curious how their tooling made them so much more
| productive. Were the tools just really well designed, or did
| they integrate perfectly with each other?
| peppertree wrote:
| I often dread when I see an employer using in-house systems
| for common tasks like project tracking and code review. I'm
| curious how does JS's internal tools stack up against systems
| out there, like Github or Jira.
| wyager wrote:
| I prefer the JS thing to github, mostly because it makes it
| a lot easier to juggle lots of in-flight changes that
| depend on each other while simultaneously supporting code
| review.
| hyperbovine wrote:
| > Most people would see this as wasteful NIH
|
| Because it is. What is the point of reinventing these wheels
| when gazillions of man hours have already been invested on
| open source tools that can do it better and cheaper?
| mgh95 wrote:
| This implies that open source tools that do more (i.e.
| serve more use cases, work with larger amounts of software)
| work better for the narrowly defined use of a single
| company, even one as large as Jane Street.
| tikhonj wrote:
| 1. You can do it better, with better taste. Existing tools
| are... not uniformly well-designed.
|
| 2. Building something _for yourself_ is qualitatively
| different than building something for somebody else. (I 've
| heard this described as "situated software"[1].) Both the
| results and the process are different.
|
| 3. Building something yourself lets you become an expert in
| the domain and the tool you're building, often _faster_ and
| _deeper_ than using somebody else 's system. It's a way to
| build up tacit knowledge and institutional capital as much
| as (or even _more than_ ) software.
|
| 4. More often than people realize, building something
| yourself ends up simply _faster_ than first learning and
| then wrestling an existing tool into the exact shape you
| need. I 've seen a lot of teams waste way more time trying
| to get some existing thing working than they would have
| spent building their own thing.
|
| Obviously it isn't always true that building your own
| version of something makes sense, and nobody is going to be
| building _everything_ from scratch... but it makes sense
| _far more often_ than conventional wisdom dictates.
|
| [1]: Term originally coined by Clay Shirky, but I can't
| find the original essay online, but looks like Gwern hosts
| a copy: https://gwern.net/doc/technology/2004-03-30-shirky-
| situateds...
| methodical wrote:
| Wholeheartedly agreed.
|
| Moreover, one thing NIH syndrome handwavers miss is that
| developing a custom situation-specific solution allows
| you to expand your knowledge in that discipline, create a
| more tailored solution, and avoid supply chain
| vulnerabilities that can come with using third-party
| packages. In my experience a handbuilt solution to a
| problem is going to be much more efficient in most cases
| than OSS out there, except in spot instances where the
| scale of the task is not able to be achieved in a small
| amount of code (e.g. a versatile graphing library),
| although these are /very/ few and far between.
| twic wrote:
| Where i work, there is a lot of NIH wheel-reinvention.
| People make exactly these arguments for it. I think it's
| mostly nonsense.
| cjbgkagh wrote:
| By the numbers I think only the best programmers, which
| is a small minority, should consider NIH. Everyone else
| should use off the shelf as much as possible.
|
| Since the best software is written by the best
| programmers, those of us interested in the best software,
| and have the capability to make such software, should be
| free to do NIH on an as needed basis.
| autoexecbat wrote:
| I think it depends on if the targeted application is
| essential to your companies core buisness/product.
|
| As an example, say if you're a small cloud vendor, you
| should probably write your own machine OS imaging
| automation, but probably not your own chat client.
| ebiester wrote:
| I'd say the key insight that I see on #4 is that people
| do not consider libraries code. They consider it black
| box. It is the same urge that causes teams to label a
| code base they have taken over "legacy" and "in need of
| rewrite."
|
| Sometimes, the answer is to dive in an seek to understand
| it. Now, that may end up meaning that you fork the tool
| or contribute back to it. It may mean that you choose to
| build anyway, and it may mean that you come back
| understanding it. However, if a library is not working
| for you, the slowest answer is often the one where you
| fiddle with it until it's working without taking the time
| to dive in.
| cjbgkagh wrote:
| I bring an inordinate amount of third part components
| inhouse for a solo dev company, so these tools/libraries
| only have one user. I do take return on investment into
| account and only bring things inhouse if I expect a
| positive net present value.
|
| A few factors not normally taken into consideration;
|
| - Tooling is a great place to practice transferable skills
| on a practical problem. This always annoyed me with the
| XKCD cartoon 1205 which didn't take into account
| improvement in optimization ability from practice in
| optimization.
|
| - I've had a few external library dependency rug pulls,
| open source and proprietary. It never happens at a
| convenient time and is a total pain in the ass. Contractual
| agreements won't save you unless you're ready to sue for
| breach of contract and even that is no real solution.
| Perhaps getting code in escrow could be an alternative but
| I've never seen that work out either.
|
| - External quality is mixed and getting worse. I'm careful
| with my own code so most of the bugs I hit is in other
| people's code. If it's a small library it can easily be
| less work for me to bring stuff in-house than to debug
| someone else's crap.
|
| Honestly I wish I didn't have to bring so much in-house, it
| would have saved me a huge amount of work. But we don't
| have an efficient market with clearly defined standard of
| goods where we could treat software as a commodity and I'm
| not sure if we'll ever get that.
| wyager wrote:
| I used to work there - the jane street code review software
| is awesome, kind of like graphite but it works reliably. You
| can write a big tree of PRs. PRs get reviewed separately and
| you can merge them in any order at your leisure, without
| worrying too much about rebase issues or clobbering review or
| whatever. I would love to have some open source thing like
| that that actually works nearly as well. It may exist, but I
| haven't seen it yet.
|
| And yeah, jane street is a pretty compelling demo that A) NIH
| syndrome is fine if you're good at writing software and B) it
| doesn't really matter that much if you use a mature language
| or some uncommon immature language
| HALtheWise wrote:
| Revup does a good job of integrating tree-of-PRs workflows
| into GitHub, and is also designed so that one developer can
| use it in a way mostly transparent to reviewers or their
| colleagues. I _think_ that Revup + Reviewable.io would
| match much of the capabilities listed in the linked talk.
|
| https://github.com/Skydio/revup
| wyager wrote:
| The issue I've run into with graphite, for example, is
| that it gets confused by things like squash merges.
|
| I think fundamentally a merge-based workflow, which
| git(hub) encourages, is kind of inimical to stacked PRs
| compared to rebase-based workflows.
| jallmann wrote:
| > Most people would see this as wasteful NIH but I'm
| convinced it was a net benefit for them--they managed to be
| so productive in an absolute sense and especially on a per-
| engineer basis because they were willing to build so much
| themselves, not despite it.
|
| It paid off for them, but I would say it's a risky move in
| general - it is _very_ easy to get sidetracked with failed
| projects that have nothing to do with the business. There are
| many examples - Uber 's internal chat system, etc.
|
| Others tools were more a necessity, eg the OCaml build story
| was not great back then. Investing in OCaml itself was a
| calculated risk.
|
| Also I wonder how things would be different if they were
| starting today, where there are more mature tools in the
| space.
| neilv wrote:
| I highlighted Jane Street's recruiting outreaches specifically,
| when talking with an R&D unit at a big financial institution.
| (I also mentioned the tactic of fringe-tech-that-some-heavy-
| hitters-love. OCaml, Lisp, Rust, Erlang, etc.)
|
| When I first heard of Jane Street, it sounded like Yaron Minsky
| was going around to MIT and such, high-touch, trying to hire
| just a few people. And later, things like this blog:
| https://blog.janestreet.com/author/yminsky/
|
| The only negative thing I recall hearing is Jane Street alumni
| responsible for the infamous FTX and Alameda Research. I don't
| know whether the individuals were already fully into hopped-up
| sociopathic/narcissistic thinking in college, or whether their
| internship and employment experience contributed.
| caddemon wrote:
| It seems their thinking is part of what led them to JS in the
| first place, which is a bit of negative and maybe they had
| some ideas reinforced there. But I also think they were some
| of the more extreme ones to begin with. They obviously didn't
| internalize JS's concerns about risk at all lol.
| antasvara wrote:
| A Jane Street trader's risk tolerance does not equal Jane
| Street as a whole's risk tolerance. When you have 1,000
| traders, each individual trader's risk profile can be much
| higher. There are also guardrails around compliance, risk
| management, etc. at the firm level that traders aren't
| necessarily involved in.
|
| The things that made them great traders also made them much
| riskier choices to lead a larger company. To them,
| compliance is an obstacle in the way of profitable trades.
| paxys wrote:
| > The only founder still at the firm is Rob Granieri, but
| insiders say it is functionally run by roughly 30-40 senior
| executives in what kinda resembles an incredibly profitable
| anarchist commune. Or as Jane Street itself puts it:
|
| > We operate as a functionally-organized structure consisting of
| various management and risk committees. Each committee is
| responsible for directing the overall strategy of the firm and
| for emphasizing the importance of risk management to our
| operations. Each of our trading desks and business units is run
| by equity unit holders who take an active role in managing our
| day-to-day operations [...]. Our management structure allows for
| effective cross-departmental communication [...].
|
| Yes, that org structure full of hierarchical business units with
| distinct responsibilities and committees and subcommittees and
| overseers and risk management totally screams "anarchy"...
| CharlieDigital wrote:
| The second definition of "anarchy" according to Google:
| > the organization of society on the basis of voluntary
| cooperation, without political institutions or hierarchical
| government; anarchism.
|
| Sounds like a perfect fit.
| paxys wrote:
| There is a CEO on top who has the power to fire anyone. There
| are department heads and middle managers. There is an org
| hierarchy. There are performance targets and reviews. Nothing
| about it is "voluntary cooperation". This is how every large
| company runs.
| pyrale wrote:
| On the other hand, this is FT's interpretation. Obviously
| they're going to have a slightly different take on what
| "anarchist" and "commune" means.
| mistrial9 wrote:
| no - fifty percent of managers control their employees
| through fear.. transparency and the magnitude of
| compensation and awards are different.. means of
| advancement are different.. overall "culture" is
| different..
| queuebert wrote:
| Especially this given how selective they are in hiring.
| There are likely hundreds of people salivating at the
| chance to replace you.
| CooCooCaCha wrote:
| I hate, so much, when people refer to jobs as voluntary
| cooperation.
|
| Maybe at the very top when you have more money than you'll
| ever need, but for the vast majority of people jobs aren't
| truly voluntary.
| tasuki wrote:
| You won't enjoy my comment then :)
|
| Yes, jobs are voluntary. The vast majority of people
| could choose not to have a job and not to entertain
| certain luxuries in life like having a roof over one's
| head or food on the table. Some even (voluntarily!)
| choose not to have a roof over their head because they
| don't like the idea of having a job.
| lovich wrote:
| Food is not a luxury. Defining things necessary for
| continued existence as luxuries is ridiculously reductive
| and is why defining jobs as "voluntary" in a world where
| access to those things is gated by having a job for most
| people is disingenuous.
|
| Taking job A over job B could be described as voluntary
| but saying that you could just be homeless and scrounge
| food, especially in locations where the local government
| makes this illegal, so working is voluntary is just wrong
| tasuki wrote:
| You are of course right that food is not a luxury, that
| was supposed to be slightly tongue in cheek.
|
| One can still choose to disobey the local government and
| be homeless. I'm not saying it's an easy choice, nor am I
| saying it's easy to be homeless. I'm just saying it's a
| choice.
| CooCooCaCha wrote:
| You're right, I don't like your comment. It always amazes
| me how heartless you libertarian types can be.
|
| Food and a roof are basics, not a luxury. The fact that a
| significant number of people in this world don't have
| those things speaks more to our failure to provide.
|
| Do better.
| tasuki wrote:
| I'm actually not a libertarian. I guess I'm your standard
| European socialist: I'm all good taxing (us) rich and
| providing for the poor.
|
| It still is a choice whether one chooses to work, as
| evidenced by those who chose not to.
|
| Edit: the "luxuries" was slightly tongue in cheek and
| perhaps didn't land well. Anyway, you're free to move to
| the wilderness, hunt/grow your own food, build your own
| shelter, and do without the socio-economic system
| altogether.
| CooCooCaCha wrote:
| You could have fooled me because that is the same
| immature definition of voluntary and choice that
| libertarians espouse.
|
| Voluntary is not binary. If someone put a gun to your
| head and told you to eat shit you technically have a
| choice but it's not much of choice is it?
| tasuki wrote:
| > If someone put a gun to your head [...]
|
| That would be a rather easy choice to make!
|
| We aren't _entitled_ to a roof over head and food etc,
| that 's all I'm saying. We should be grateful when we
| happen to luck into circumstances (such as a job) that
| allow us to have roof/food. It's not something everyone
| has.
|
| Saying we were involuntarily forced into having a
| job/roof/food feels very strange when compared with the
| people who weren't forced to have either of these three
| things.
| citizen_friend wrote:
| Volunteer committees of execs is a standard management
| practice and not anarchy by any stretch of the imagination.
| yohannparis wrote:
| Thank you! I had to look it up, I did not knew English had
| tow definitions for Anarchy, I did not understood the parent
| comment.
| robertlagrant wrote:
| > Sounds like a perfect fit.
|
| Sounds like a company.
| bena wrote:
| Yeah, that doesn't exist. Any gathering of people are going
| to have political institutions whether they are codified or
| not. Similarly, there's going to be someone or some group of
| people who the others look to for direction. And whether or
| not it is codified, those people will form a layer of
| hierarchy for your "non" government.
|
| Because people seem to think it's "politics" and "government"
| that are the problem. It's not. It's people. It's always been
| people. It will always be people. People are the problem.
| Failure to acknowledge that people can and will be shitty is
| going to doom your system before it starts.
| CharlieDigital wrote:
| Hierarchical organization, like political affiliation, is a
| spectrum.
|
| I'd say that Jane Street would seem to be less hierarchical
| than others and thus more closely aligned to an anarchist
| collaborative.
|
| (It's all relative, I suppose. Bernie is a "leftist" in the
| US and would probably be a centrist in Scandinavia)
| kqr wrote:
| > whether they are codified or not
|
| Was it an intentional rhetorical device to brush past the
| important distinction?
|
| Yes, there will always be more powerful cliques. This is Jo
| Freeman's _The Tyranny of Structurelessness_. But the point
| is specifically whether those cliques and hierarchies are
| encoded into formal committees or whether they remain fluid
| based on the desires of the group at any given moment.
|
| If we avoid codifying the hierarchies, we get better
| distribution of information and resources, people are held
| responsible to those who delegated tasks to them, and
| responsibility can be rotated more freely.
| bena wrote:
| You are describing an ideal, not what happens.
|
| What really happens is that important information and
| resources get hoarded because that lets you control
| things. The only people "held responsible" are those you
| can convince others to punish arbitrarily. You'll create
| an entire shadow government the majority of the group has
| no knowledge of.
|
| And showing how it worked within a group of 4 to 5 people
| is kind of useless. Lots of things work on small scales.
| The minute you scale to the point where you can't keep
| track of everyone, you're going to need an actual system
| in place to deal with everyone.
| sage76 wrote:
| Yeah agreed. In fact, orgs that try to pretend like they
| have no hierarchy frequently have worse culture and higher
| employee turnover. See: Valve.
| FrustratedMonky wrote:
| "without political institutions or hierarchical government;"
|
| Think when trying to translate a society to a corporation,
| then each of the terms must also be translated.
|
| For a 'society' there is a government. And politics is
| dealing with the government policies, how we come up with
| rules.
|
| But, if you want to translate to a corporation, you can't
| just say it doesn't have 'government and politics' because
| the corporation isn't dealing with the larger society. You
| need to also scale down the terms,
|
| The CEO and the Hierarchy of bosses, are the 'Government' and
| 'political institutions' are the departments like HR,
| Marketing, and between them there are 'politics'.
|
| There is no real 'anarchy' like individuals having freedom to
| 'just work on what they feel like'.
| amadeuspagel wrote:
| Sure, every corporation is an anarchy then since no one is
| forced to work there, so it's all voluntary cooperation.
| theFco wrote:
| but the other part of the definition is also important:
| "without political institutions or hierarchical government;
| anarchism". So the typical corporation is not exactly an
| anarchy according to the definition.
| JackFr wrote:
| Honestly 40-50 years ago all of the big investment banks were
| partnerships and operated in much the same way. Partners owned
| equity and by today's standards they were relatively risk
| averse because it was their money to lose, with no stock price
| to pump up.
| dangoodmanUT wrote:
| Just got 86 popups trying to look at this page
| klelatti wrote:
| Great comment from the FT's comments section on this piece.
|
| > A good mate who runs and wrecks expensive cars for hobby once
| reminded me that course plotting (i.e. research) and braking
| (i.e. risk management) are the two sine qua non contributors to a
| successful race.
|
| Along with a reminder that disasters happen when businesses
| forget this (Boeing!)
| carlsborg wrote:
| This company extracted ~$22 Billion in gross trading revenue from
| markets with quantitative trading strategies last year.
| mschuster91 wrote:
| > net trading revenues of $4.4bn in the first quarter
|
| That's a lot of money for someone who is essentially a middle-
| man. What a grift, about 13 dollars for each average American
| lost out to them a quarter.
| Majromax wrote:
| First, their trading's global, so "for each average American"
| isn't the right denominator, nor is it obvious to divide things
| on a per capita basis rather than a wealth-weighted one.
|
| Second, it's not at all obvious that market-making is a zero-
| sum game, where profits to the market maker are "lost out" to
| someone else. Market-making profits from the bid/ask spread,
| but a new market maker tends to _reduce_ that spread. Ordinary
| people tend to invest as price-takers, and thus they benefit
| from a reduced bid /ask spread.
| drgiggles wrote:
| I work in quantitative finance and have wanted to to start using
| OCaml at work for years. I just find that unless you are at a
| shop like Jane Street with a well developed proprietary code
| base, internally developed tooling, etc, there just isn't the
| ecosystem available for me to be nearly as productive as I can be
| in other well accepted languages in the quant dev space...which
| is a bummer. It's been a little while since the last time I
| investigated this though.
| 999900000999 wrote:
| Any tips for getting a first quant job ?
|
| Is learning C++ a must?
| detourdog wrote:
| hang out in bars around the office you want to work at.
| dkekenflxlf wrote:
| THX
|
| actually, quite a good idea, regardless which sector!
| detourdog wrote:
| More generally it doesn't have to be bars. Go to where
| the people are that you want to meet.
| drgiggles wrote:
| When we hire a junior person we are interested in math
| background, ability to communicate real world value of
| various models to our investment process and familiarity with
| computer science and software engineering concepts more than
| we care about experience with specific languages or
| technologies. That being said, C++ does still dominate this
| space so having exposure to it certainly would not hurt.
| 999900000999 wrote:
| Does Fintech experience matter at all. I'm still in the
| finance space, but I'm very much just an average software
| engineer.
|
| I've been meaning to learn C++, but I always find it
| intimidating.
| renewiltord wrote:
| Doesn't matter. It's same as any tech. Need to understand
| mathematics and algos and have great fluency in code.
| Can't speak for the other guy but I suspect he's same: no
| amount of skill "aligning stakeholders" and "managing
| cross-functional teams" is of much use in the business if
| you're at a prop shop. Have to be able to write code. No
| "blocked on other team", "Kernel Timestamping API is
| undocumented" etc.
| trelane wrote:
| Who is "we" here? What is your approach for more seasoned
| folks?
| drgiggles wrote:
| I am a strategist at a smallish boutique quant investment
| firm. This is how we think about hiring a junior person.
| It's not all that different for a more senior person, but
| actual development experience would likely be more
| important, we would expect more contribution sooner from
| a more experienced person. More senior jobs also might
| have more specific responsibilities and therefore require
| more specific knowledge of technologies, etc. Many junior
| analyst roles support the team as a whole and there is
| less concern around experience with specific
| technologies, typically.
| DaiPlusPlus wrote:
| Get a Bloomberg Terminal - just for the social-networking
| features.
| xNeil wrote:
| $24k per year to get a job?
| DaiPlusPlus wrote:
| My reply was somewhat facetious; though I have heard some
| pretty crazy personal anecdotes about what happens in the
| Bloomberg chat service.
|
| But even taken at face-value, Bloomberg's annual fee is
| comparable to the yearly cost of an undergraduate degree
| - so it might very well be a fair deal.
| wuj wrote:
| Good intuition in probabilities is a must.
| tomp wrote:
| No, C++ is useful if you want to work in HFT (where you're
| paid $$$ if you're a programmer).
|
| For quants (progression towards a trader / portfolio
| manager), Python / Matlab / R is enough.
| unstruktured wrote:
| If you use Jane street's base, core, and async libraries, you
| already have most of the tooling you need.
| lysecret wrote:
| Also in quant finance. Have you given F# a shot? We use it and
| are very happy.
| gosub100 wrote:
| It's brilliant if you think about it as an employer that wants
| to limit employee turnover. Great, you're an ace algo dev in
| OCaml, where you gonna jump ship to?
| jddj wrote:
| Some idle trivia, in the London office the d in the illuminated
| "Food Bar" sign above the cafeteria has been switched off.
| collegeburner wrote:
| the higher the stock, the downer the foo
|
| the bigger the vol, the more imma do
| djaouen wrote:
| I have to give it to them, choosing OCaml was excellent bait.
| Gives them an aura of intelligence while they milk Wall Street
| dry ;)
| taneq wrote:
| Whatever Jane Street is, it's not big enough to justify that
| abomination of a popover-riddled mobile site.
| jedberg wrote:
| Interesting, yesterday there was a thread on reddit in
| /r/ExperiencedDevs asking "What place is known as the ones with
| the best engineers now? One where if you saw that place on their
| resume you'd automatically assume they were good?"
|
| And one of the answers was Jane St. Apparently they produce great
| engineers.
| EMM_386 wrote:
| > Jane Street is stupidly profitable -- net trading revenues of
| $4.4bn in the first quarter, after a $10.5bn haul in 2023, and a
| profit margin north of 70 per cent -- but it bears repeating.
| That is the fourth straight year of net trading revenues
| exceeding $10bn. Gross revenues came at a record $21.9bn in 2023,
| up 34 per cent from 2022.
|
| Yes, I suppose this is all something to get all starry-eyed over,
| Jane Street encroaching on Citadel Securities, the two of whom
| control 30% of the US equity market volume.
|
| I see it another way. I see people's hard earned money being
| siphoned by enormous financially-engineered vacuums, never to be
| seen again. And not just in the US, globally. This won't stop at
| 30% of the US equity market. It won't stop until the music stops
| and the last chair breaks. Which may or may not be soon. It will
| certainly be coming at some point.
|
| Five times the London Stock Exchange's entire trading volumes in
| 2023 in just your ETF arm? Sure ... this sounds like reasonable
| growth ...
|
| > This is why some people argue that APs like Jane Street have
| become systemically important.
|
| Oh, you don't say!
|
| > About 80 per cent of the company's capital comes from employee
| equity
|
| That's adorable. They're like a little mom-and-pop shop ...
| except not anything like that.
| pas wrote:
| > I see people's hard earned money being siphoned by enormous
| financially-engineered vacuums, never to be seen again.
|
| can you expand on this? I have zero idea of what Jane street
| actually does and how they actually make money. (someone wrote
| that they have ~450 traders. trading what? equity? stocks? dark
| pools? PE? are they market makers? are they offering services
| to institution types?)
|
| also what does "people's hard earned money" mean? you mean that
| Jane Street takes away their 401k or ... ?
| zie wrote:
| They provide market liquidity. The chances that a seller and
| buyer come together at the exact same time across the 7.5
| hours of open market operations is fairly low, so they buy
| from sellers and sell to buyers and hold in between to keep
| the markets liquid. This liquidity costs(often advertised as
| the bid/ask spread).
|
| We could essentially close them down if we moved all trading
| to say 1 hour a day.
| pas wrote:
| regular buyers/sellers can use limit orders, no?
|
| speculators can then sell/buy to/from them and if they are
| doing it well, they make a profit. (and help narrow the
| spread.) sure, great, they even inject some liquidity. but
| why do we want a narrow spread? it only helps people who
| don't know which side of the trade they would rather be on,
| no?
| cityofdelusion wrote:
| The bid/ask spread is never good, as it is a fixed
| transaction cost no matter what side you play. In fact,
| the equity under consideration has to move greater than
| the spread to even realize a profit -- with the spread,
| you are always "buying high, selling low". With very
| narrow spreads, the spread is only a few cents at most
| and this consideration evaporates.
|
| The spread also compounds quickly. A wide spread
| indicates low volume and a sparse order book. This means
| if you need to offload even say 100 shares, you can
| single-handedly as a retail investor, widen the spread
| yourself and take an even larger loss.
|
| Liquidity injects supply/demand and its always a good
| thing for retail investors. It goes past the stock market
| as well, spreads are why pawn shops, thrift stores, and
| even eBay can be profitable in certain goods and with
| other goods, not so much.
| zie wrote:
| I agree with @cityofdelusion's comment.
|
| You can absolutely set limit orders, but depending on the
| limit, other people may or may not be willing to trade
| with you. Your order can sit all day and never be
| accepted.
|
| If I want to sell AAPL, and set the limit oder to
| $1/share, buyers would take that trade instantly. But if
| I set the limit order to $10k/share, nobody would buy
| from me.
|
| The exact same thing happens with the buy side.
|
| It's like haggling with the vendor on the street corner
| or negotiating with your car dealer.
|
| Think of it like a liquidity tax. Jane Street and other
| market makers(Citadel, etc) compete over that liquidity
| tax. The more often a fund, ETF or stock is traded, the
| lower the liquidity tax.
|
| If XYZ Corp is very illiquid and only trades a few shares
| a month, then Jane Street will charge you a lot of tax to
| allow you to trade it instantly, because they have a
| harder time knowing what they can get for it a month from
| now when someone actually wants the trade.
|
| You can see the wide range of bid/ask spreads for ETF's
| here: https://www.etf.com/sections/news/etfs-highest-
| lowest-tradin...
|
| Notice something like SPY(S&P 500 fund) is basically free
| to trade, but something like EEH costs you a very pretty
| penny to instantly trade. For EEH, you might be better
| off re-issuing limit orders and just hoping someone comes
| along that wants that fund. If you let Jane Street or
| other market makers handle the trade, they will charge
| you more than it's worth to trade.
| clusterhacks wrote:
| That sounds interesting. Are there easy sources for seeing what
| companies drive US equity market volume? My google-fu failed me
| but maybe I am missing something specific in the fintech
| industry that tracks that kind of thing . . .
| Galanwe wrote:
| > Are there easy sources for seeing what companies drive US
| equity market volume?
|
| No. Flow data is quite expensive, and most providers will
| only provide bucketed data unless you contribute with your
| own flows.
|
| OP obviously has no idea what he's talking about but hey,
| what wouldnt you do for some internet points.
| zie wrote:
| They provide market liquidity. The chances that a seller and
| buyer come together at the exact same time across the 7.5 hours
| of open market operations is fairly low, so they buy from
| sellers and sell to buyers and hold in between to keep the
| markets liquid. This liquidity costs(often advertised as the
| bid/ask spread).
|
| We could essentially close them down if we moved all trading to
| say 1 hour a day.
|
| Though most retail traders are upset they can only trade 7.5hrs
| a day, they want to trade 24/7 instead. They seem to WANT the
| liquidity and are apparently willing to pay for it.
|
| Me, I'm fine with trading for only an hour a day, but I get not
| everyone is as lackadaisical as me.
|
| Unless you have a better mouse trap to solve the liquidity
| problem, this is the best we have for now.
| alchemist1e9 wrote:
| > We could essentially close them down if we moved all
| trading to say 1 hour a day.
|
| Why why why why would you think this way?
|
| You would accomplish absolutely nothing other than increasing
| massively the volatility in that hour, massively reducing
| liquidity.
|
| The reaction of so so many commenters on this story is based
| in Envy. It's a very unfortunate but instinctual human
| reaction. Unfortunate because it results in ideas and
| policies that make society less efficient and less productive
| and therefore less wealthy overall.
|
| Jane Street's 2613 employees are replacing at least 10x that
| many needed to perform the same critical and necessary
| service to the markets from 30+ years ago. They do it at
| lower total cost to the system. Capitalists win by providing
| a better service or product and that's absolutely true of
| them, in an extremely competitive environment with very high
| stakes, they have succeeded.
|
| Stop the armchair Envious nonsense!
| zie wrote:
| First, I never said it was a great idea, or that we
| _should_. It 's not about envy or not. Liquidity provides a
| great service, if we need long market hours. If we don't
| need long market hours, it arguably provides little to no
| value.
|
| Yes it would massively reduce liquidity, that's the point
| :) Yes volatility would go up during that hour(especially
| at the beginning), because everyone would have to figure
| out the new pricing, but it would remove the need for
| liquidity as well. It would bring all the sellers and
| buyers together at the same time, eliminating the need for
| market makers to provide liquidity.
|
| I'm not suggesting we actually do this, in fact, the
| markets are trending the other way to 24/7 market trading.
| I'm sure Jane Street and the other liquidity providers are
| 100% on board with this plan of 24/7 trading.
|
| Personally, I'm very happy with the status quo, 7.5hr
| trading days M-F. Though personally I'd prefer they shift a
| little later so it's easier for west coasters to trade at
| market open. I.e. shift from EST to CST. I know that won't
| happen, but that would be my only real complaint.
|
| > Jane Street's 2613 employees are replacing at least 10x
| that many needed to perform the same critical and necessary
| service to the markets from 30+ years ago.
|
| Agreed, they are doing a bang up job providing liquidity to
| the markets. I'm happy for them. I use their service, it's
| great.
|
| If we as a society want long liquid trading markets, then
| we need people like Jane Street to provide that liquidity.
| If we don't want long liquid trading markets, we can
| eliminate them and force buyers and sellers to meet all at
| a given point in time. One is not necessarily better than
| the other, it's a trade-off.
| alchemist1e9 wrote:
| > If we as a society want long liquid trading markets,
| then we need people like Jane Street to provide that
| liquidity. If we don't want long liquid trading markets,
| we can eliminate them and force buyers and sellers to
| meet all at a given point in time. One is not necessarily
| better than the other, it's a trade-off.
|
| This is categorically false. Long electronic trading
| hours are simply a better solution, a more fair solution,
| a more competitive solution, a more efficient solution,
| and what the market is demanding. There is no trade off,
| especially as most liquidity is supplied by automated
| systems that can operated 24/7/365 if needed.
|
| When you compress transactions into specific time frames
| it isn't about forcing buyers and sellers to meet, you
| actually will reduce the numbers of buyers and sellers
| overall, you will lower the value of the asset, because
| assets are given liquidity premiums. The more you
| restrict transactions and reduce liquidity the less
| utility an asset has. This is one of the often overlooked
| reasons Bitcoin has more intrinsic value than is assumed
| at first by observers.
|
| When a primary issuer creates new securities this is very
| different situation and why an auction is needed, for
| example for new treasury bonds or any other initial
| offering. In that situation there is only 1 seller, the
| issuer, and the question is what is the starting fair
| price at which buyers appear.
|
| In a secondary market there are many current owners of
| the asset and many potential sellers. They don't decide
| to sell or buy independently and then meet. That is
| simply not what occurs. Instead think that every current
| owner is a potential seller and every participant who
| follows that market is a potential buyer. Sellers attract
| buyers, buyers attract sellers, both when they push the
| prices around via the market makers. By extending the
| time period for this dynamic to occur to continuous
| central limit order books (CLOBs) it make the most
| efficient process, periodic auctions have been proven to
| be very poor ideas and results in choice paralysis of
| participants, CLOBs incentivize higher rates of decision
| making and healthier dynamics. All properly operated
| CLOBs will also have a circuit breaker to auctions should
| time be need to digest rapidly changing information and
| the continuous book can't be created within some limits.
|
| By having extended market hours you widen the pool of
| buyers and sellers who can participate. You also allow
| markets to instantly digest new information as quickly as
| possible, this is most fair to all participants equally.
|
| Extended trading hours are strictly better than
| restricted trading hours.
| zie wrote:
| You seem to imply I think it's better without them. I'm
| not saying that at all. I'm saying we could do it without
| them, if we, collectively, wanted to. Is there a cost to
| that? Of course there is, there is a cost for any big
| change like this.
|
| Private Equity seems to do just fine without any of these
| liquidity problems.
|
| Bond Markets are completely private still, sure some
| market makers are now playing in that space, but it's
| still completely private transactions and you are on your
| own to find buyers and sellers. Seems to work well
| enough.
|
| Certainly public markets and stock exchanges are great
| inventions, but we didn't have market makers in the early
| stock markets for a very long time. Well one might argue
| JP Morgan(the man, not the bank) was _THE_ market maker
| for all of the NYSE early history. He certainly bailed
| out the markets once or twice before the Fed existed and
| decided to do the job for him.
|
| So we can absolutely do it without market makers. So I
| stand by it being a trade-off. If one really wants to
| kill off market makers, we can, that doesn't mean we
| should.
|
| > The more you restrict transactions and reduce liquidity
| the less utility an asset has. This is one of the often
| overlooked reasons Bitcoin has more intrinsic value than
| is assumed at first by observers.
|
| This would imply that Cash should be more valuable than
| it is? USD cash has near infinite liquidity, but at best
| it's worth around 0%/yr real return.
| EMM_386 wrote:
| > They provide market liquidity.
|
| I actually know a little about this space. You know what the
| easiest response is that is _always the answer_?
|
| "We provide liquidity".
|
| Sounds important, most people don't get it, it works.
|
| But it's not like the market is going to grind to a halt if
| Jane Street disappears overnight. Of course, people will say
| that. Not people telling you the truth.
|
| I actually considered "but, but, THE LIQUIDITY!" in my answer
| but I felt there was sufficient snark.
| zie wrote:
| Agreed, orders maybe wouldn't fill quite as fast, but it's
| not like markets would fall over and die.
| alchemist1e9 wrote:
| Yes they would. It would be a significant and
| catastrophic mistake to restrict trading based on
| feelings of envy. It would be technically negative in
| every measurement possible.
|
| So many poor policies originate from Envy and poor
| reasoning not grounded in logic and understanding of free
| markets and economics. This would be yet another classic
| example of that.
| andrepd wrote:
| I do agree with you. It's neither sustainable not really
| desirable, the amount of effort and resources and smart people
| dedicated to the financial sector.
| alchemist1e9 wrote:
| Less smart people are employed by the financial sector than
| in the past and less will be in the future.
| caddemon wrote:
| Than in the past? That seems untrue at face, do you have a
| source? Firms like JS recruit a lot of people that wouldn't
| have ever considered a traditional finance institution in
| any event.
| alchemist1e9 wrote:
| > I see it another way. I see people's hard earned money being
| siphoned by enormous financially-engineered vacuums, never to
| be seen again. And not just in the US, globally. This won't
| stop at 30% of the US equity market. It won't stop until the
| music stops and the last chair breaks. Which may or may not be
| soon. It will certainly be coming at some point.
|
| Envious bullshit! The reason they are so profitable is that
| believe it or not they are replacing earlier operators who were
| less efficient and taking more transactions costs out of the
| system before. To be anti-Jane Street is the same as being pro-
| Big Bank of the past, that was taking more money out of the
| economy doing a worse job!
|
| Unless you know the history of global financial markets and
| lived it then you don't understand. For example in the late 80s
| the CBOT treasury bond bit had over 1000 traders in that pit.
| They were all making money and quite a few a huge amount. And
| there was many more people supporting those traders of the
| floor. That was just a single futures bond contract! With Jane
| Street we have 2,631 employees doing the equivalent job
| globally and for less total cost of at least 80,000 employees
| in late 80s.
|
| The profits per employee are higher obviously but that's the
| effect of technology and productivity but the total price being
| charged to the economy as a whole is much lower. This trend
| will continue and I would not be surprised in 10 years that a
| company of 200 people will provide the entire function of those
| 2600 today, and probably the profits per employee will be $10M
| per person. But that's what we want, is a good thing not bad,
| portraying otherwise is just Envy.
| hackerlight wrote:
| Ignorance leads to the assumption a piece of economic activity
| is zero sum. You see it everywhere
| neonate wrote:
| https://web.archive.org/web/20240502153841/https://www.ft.co...
| ur-whale wrote:
| > it accounted for 10.4 per cent of all North American equity
| trading in 2023
|
| Which means they're rapidly coming to a position which will
| easily allow them to game the system (what used to be known as
| "cornering the market").
|
| I even wonder if their system has already learned cornering by
| itself via stochastic gradient descent.
| Galanwe wrote:
| > Which means they're rapidly coming to a position which will
| easily allow them to game the system (what used to be known as
| "cornering the market").
|
| These are flows, not ownership.
|
| Also, taking Citadel as an example, a vast portion of these
| flows are not their own, but rather thirs parties offloading
| their flows to them, so they have the underlying best execution
| guarantee to provide.
|
| An other way to look at it is that investors are moving away
| from traditional brokers to execute their flows, because these
| HFT firms have become so good. So instead, investors offload
| their flows to HFTs acting as DMM instead.
| wuj wrote:
| Yeah, quants firms are great at PR and marketing. They give out
| free merch, sponsor hackathons, and organize in-person events
| with all expenses paid. I study at Berkeley and so many students
| here rock their merch, which gave them even more exposure on
| campus.
|
| Their effort definitely paid off though. Quants like JS, Citadel,
| or Jump hire some of the brightest students from Berkeley and
| other top CS schools.
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