Senior IT staff working for hedge funds are enjoying bumper bonuses in 2011 that are up to 60 percent higher than last year.
According to business and technology recruitment firm ReThink, IT staff with experience in designing and implementing algorithmic trading platforms can now expect bonuses of up to 80 percent of base pay, up from around 50 percent of base pay in 2010.
Some highly qualified IT staff working for hedge funds are now earning a base salary of around £100,000, with senior contractors typically earning £750 per day, ReThink said.
Bonuses for some of the highest-performing staff have jumped from around £50,000 in 2010 to £80,000 in 2011. There is also a growing trend for hedge funds to pay bonuses quarterly, rather than on an annual basis as in investment banking.
ReThink says that whilst investment banks "have had a consistently poor year", the wide range of trading strategies followed by hedge funds means there are enough funds having good years to keep pushing pay rates up for the right IT staff.
Fhamid Malik, head of financial services at ReThink, said: "Competition amongst investment banks and hedge funds to create the fastest and most reliable trading systems is leading to a shortage in the supply of IT staff with key skills."
There has been "heavy investment in greenfield builds", where hedge funds have brought in new software to replace or upgrade bespoke IT systems. Hedge funds will be "constantly investing in IT systems to reduce the 'latency' (possible trading delays) of these platforms, ReThink said.
Heightened regulatory requirements have also pushed investment in IT up the priority list for most hedge funds.
Malik said: "Continued regulatory pressure has meant that funds are re-engineering their front office systems, to ensure better tracking of complex financial transactions."
There may be high wages and bonuses to be had but an international body that is tasked with helping control securities markets has called for tighter limitations on the high-speed trading systems used by hedge funds and investment banks.
In a report, the International Organisation of Securities Commissions (IOSCO) is calling for greater controls of high-speed trading systems to "mitigate risks", at a time when automatic algorithmic trading activity is increasing.