Why Jane Street should pay more than Citadel Securities & both should pay more than banks
Not long ago, the most able students with an interest in financial markets wanted to work for Goldman Sachs or JPMorgan. Now they're more likely to aspire to work for Jane Street or Citadel Securities. This week's revelations about first half revenues at the two electronic market making firms help explain why.
Get Morning Coffee ☕ in your inbox. Sign up here.
Bloomberg says revenues at Citadel Securities hit $4.9bn in the first six months of 2024, while those at Jane Street reached $8.4bn. Net earnings for the two firms over the period were $2.7bn and $6.1bn respectively.
Neither firm is publicly listed, but recent headcount data is available for both. The Financial Times reported in April that Jane Street employed 2,631 people globally, a number that hasn't been updated by Jane Street since. Citadel Securities, by comparison, employs around 1,600 people on a global basis.
The chart below shows the resulting global revenues and profits per head at Citadel Securities and Jane Street in the first half of 2024, based on published data.
For 2024 as a whole, the implication is that Citadel Securities should generate $6.2m of revenues per person and $3.4m of profits. At Jane Street, the comparable figures are $6.4m and $4.6m.
Extrapolating from the first half, the average employee at Jane Street looks a lot more profitable than their counterpart at Citadel Securities. The implication would seem to be that Jane Street people should earn 35% more. That may not be the case. Neither firm provides public pay data globally, but the most recently available figures for Citadel Securities Europe show it paying $685k (£564k) per head in 2022, while Jane Street UK LLP paid a remarkably similar $680k according to its most recent published accounts for 2023.
Both Jane Street and Citadel Securities can, however, afford to pay a lot more than investment banks. In 2023, Coalition Greenwich says revenues per head for front office staff working in equities sales and trading in banks averaged just $3.6m.
Front office staff are revenue generating, so their productivity should be higher than productivity for staff as a whole. By comparison, the revenue and earnings per head figures for Citadel Securities and Jane Street in the chart above are for all staff at each firm, working in both the front and the back office support functions.
Recently filed accounts for Jane Street UK Partnership indicate that of 636 people employed in the UK last year, only 296 worked in trading, with the rest spread between technology and infrastructure. If we therefore assume that only half of Jane Street's global employees work in comparable 'front office' trading roles, the implication is that front office revenues per head for the full year are closer to $17bn. That's nearly five times higher than Coalition Greenwich's figure for banks... This explains their appeal.
Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, WhatsApp or voicemail). Telegram: @SarahButcher. Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)
Photo by Samuel Girven on Unsplash
