EXCHANGE, MARKET DATA, FINANCIAL TECHNOLOGY OVERVIEW
Sure, when your parents grew up, computers might not have been a critical aspect of driving a business in finance. In fact, financial technology might have been practically irrelevant when transactions were paper-based or cumbersome, manual processes. In the last few decades however, computers and other aspects of the information technology have become essentially a control center for any modern financial services organization.
Every current financial company uses technology for just about everything: it is used to communicate to and between it's employees, store information about it's clients, run complicated computer models which are then used to price and to trade each financial product, and to document pretty much everything. Technology can serve as a central source of information for anything and everything a company's employees need to know. Because financial technology has become an int ...More »
Professional roles within financial technology usually fall under the umbrella of the following categories: development, technical support, systems support and engineering, business analysis or project management 1.
If one decides to become a Developer, he/she will be responsible for writing very specific programs for a company which will assist them in a particular function such as pricing of products, trade booking, risk calculation 1 or more. The Developers will study and practice one or more computer languages to write the programs in. The most common languages used by banks today are called C++, Java, and .NET 1. Some of the developers immersed into electronic trading development will also utilize the FIX protocol when working with the messages 9. Some people may still work in the application development groups, but work as Quality Assurance Analysts and focus on the functionality of these applications.
Some Developers and Techn ...
PRINCIPLES AND STRATEGIES
Strategies for dark pools are not exposed to the markets, however some companies use a model called Black-Scholes. Black-Scholes is a complex mathematical equation used by many financial technologies as a model for valuing options, whether traded over the counter or through an exchange 1.
It is very widely used in practice because, compared to other models, it is easier to calculate and it models the relationship of all variables. Although the volatility is not consistent, the results of the model are helpful in organizing hedges in the appropriate proportions to minimize risk and yield a robust solution 2.
1.) http://www.efinancialcareers.com/ (careers in financial markets 2008-09)
6.) 2007. Westwater Corporation. "Dark Pools of Liquidity: Summary and Impact Analysis"
Most positions in financial technology sit within information technology (IT) departments of financial companies. Although information technology is really a separate industry from financial services, the salaries within IT can actually be quite similar to those in finance in many situations. For the most part, employees working in financial technology can expect a bonus whereas those in traditional technology roles outside of finance might not be eligible for bonuses. The bonus will usually mirror the general bonus type of that company so, while the bonus will likely be a large component of this employee's salary, it will likely be around 20% of base salary in an investment bank and even higher than this in a hedge fund. Market data companies, on average, pay bonuses between 5% and 15% of base salary. Some of the dark pool trading companies have been known to offer communicated bonuses of up to 80% for those who have demonstrated their value and loyalty to a company after a certain period of time.
When putting the bonus aside, salaries for Software Developers at the entry level can start around $50k - $60k as a basic annual salary. As Developers grow in their career and become more senior, their earning potential will also increase. Some very senior Developers might make more than $200k annually while Managers and Architects in these groups can even surpass that.
Sales roles for financial technology companies can have a wide ranging base salary but it is usually somewhere between $40k and $150k, the lower number being for an entry level candidate and the higher number for a very well established sales professional 4. There will almost always be a bonus or commission structure as an added component to salary and, for those successful in sales, this extra income could potentially double an employee’s base salary.
Successful candidates in the financial engineering field are very well compensated 1. Quantitative Technologists with proven academics can expect starting salaries between $90,000 and $100,0001 but as always, the salary is dependent on the company, geographical area, academic background, and proven knowledge and experience. One entry level candidate was seen to accept their first position at a base salary of $125,000 and a communicated total reward of $300,0001.
According to Salary.com, the median total reward for a Senior Financial Systems Executive is $262,350 12. Senior Quantitative professionals and Managers working at investment banks or large asset management firms have made upwards of $1 million on total compensation 1. The highest paid financial systems executives are in the Northeast Region, such as New York City and this is also where the most positions in this area of finance can be found 12. The same data analysis has revealed that Financial Business Analysts have a median salary of $96,477 with the highest paid Analysts in the Western and Northeastern States and the most opportunities in this area in the Southern US States12.
In a recent survey by a boutique data management firm, the majority of the 300 participants working within the financial technology sector made between $100,000 and $150,000 and those in hedge funds were found to have the highest salaries between $326,087 and $398,551 13. More valuable information on salaries in financial technology can be found here.
TIPS FOR GETTING HIRED IN FINANCIAL TECHNOLOGY
When looking at securing a development role in a financial company, it will be useful to know what they are looking for. As indicated earlier, there is a need for those with strong educational backgrounds. Morever, financial companies mainly look for developers who have already worked in the financial sector on the development of real-time, high-volume trading systems who also have business knowledge in the area of interest. Each financial company has a need for bright operations and technical employees, and currently employs thousands of people who will gather the needed information, ensure its accuracy, and create the systems to provide it. There is a current need in the industry for people with analytical skills to create the algorithms which drive these programs.
Banks are always looking to hire top talent within their technology divisions to serve as the 'fuel' to drive th ...More »