Morning Coffee: Jane Street hiked pay above Citadel Securities. Hudson River Trading is spending $1bn on AI

Earlier this year, we observed that Citadel Securities was on track to pay its average employee $2m for 2025. This remains the case. But in the third quarter at least, Jane Street has paid its average person more than Citadel Securities after a big hike in its spending on compensation.

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Bloomberg reports that Jane Street increased spending on pay by 63% in the third quarter, to $1.94bn. Jane Street says it employs 'more than 3,000 people.' LinkedIn says Jane Street has 3,184 employees. This being so, Jane Street seems to have spent $609k on pay per head for the three months to October.

By comparison, Bloomberg says Citadel Securities reduced its own compensation spending by 2.5% in the third quarter, to $855m. Citadel Securities employs around 1,700 people. So that's an average of $502k per head.

On an average basis, therefore, Jane Street become more generous, by 21%.

It may not last. We don't have Jane Street's figures for compensation spending during the first nine months of this year, but Citadel spent $2.7bn. This implies average pay per head at Citadel Securities of $1.6m for the first nine months and $2.1m for the full year. Pay at Citadel Securities is unlikely to be equally distributed. Pay at the 'communist' fiefdom of Jane Street is likely to be more so.

Bloomberg notes that Jane Street and Citadel are not engaged in the same activities. Citadel Securities is a market making firm. Jane Street is a market making firm too, but it has a hedge fund attached. Citadel Securities' hedge fund is detached, and it is called Citadel.

Separately, Hudson River Trading (HRT), another electronic trading firm, is spending a lot of money on AI so that it can compete with the likes of Citadel Securities and Jane Street. 

Bloomberg reports that Hudson River's AI spending is now $1bn a year as it invests in GPUs to give its employees access to large language models. While it does this, HRT is hiring 'GPU systems engineers' on salaries of up to $300k, but it's also hiring discretionary traders and relationship builders as it grows its options trading business and moves into mid-frequency trading. 

Hudson River's revenues in the first nine months were $9bn. Jane Street's were $24bn and Citadel Securities' were $8.4bn. HRT's compensation spending has not been divulged. It is known to be very generous. 

Meanwhile...

UBS has hired 25 senior dealmakers globally this year, 17 of whom are based in the Americas. It expects to recruit a similar number of MDs in 2026 and to expand in the healthcare, technology and other sectors. (Financial News) 

Large law firms in London now have offices with saunas, hair salons and 10,000-book libraries. There are also cool down walls for hot days and heated lockers for damp ones. (Financial Times) 

How to be a portfolio manager in a drawdown. "When performance is bad, pay your team (the ones you want to keep) even if it means you make no money. This is especially true if you hoard most the upside in good years, and a bit less important the more you share in the upside." (HF Reflection) 

Historically, college grads had much lower rates of unemployment and if they lost their job, they were not unemployed for long. Now unemployment rates and the job-finding rate are converging between college grads and everyone else. (Bloomberg) 

Saudi Arabia says it has a rush of IPOs. “We have listed more than 40 since the beginning of this year and we have the same number that have already applied." (Bloomberg) 

When BlueCrest was closing to external money in 2015 it had 250 investment professionals and a total of 570 employees. Today its headcount is slightly higher on a par with a major pod shop like ExodusPoint, which manages $12bn. (RupakGhose) 

We come up with $161k per annum as a breakeven for an “Average Family”. (Substack) 

Cliff Asness at AQR deeply disagrees that the average family needs even $140k. (X)

You can make $200k a year building data centres but you might have to live away from your family and drive 40 hours to see them twice a month. (WSJ) 

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