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Really? It doesn't make much sense to have bonuses for automation since it's largely a group effort. And that's probably the main reason why those performance b

by pnako 7y ago

Really? It doesn't make much sense to have bonuses for automation since it's largely a group effort. And that's probably the main reason why those performance bonuses are disappearing.

scawf 7y ago
Automation = following model Whoever build a good model get a good bonus ?
- pnako 7y ago
  You're not wrong in the absolute; my point is more that designing, implementing and running a model, good or bad, is increasingly team work. So there is not a single 'whoever' behind that model.
anonu 7y ago
Soccer is a group effort, but you still have star players that get paid outsized compensation. Trading is very much about managing and taking on risk. Even if there are computers managing trading - managing risk is still human driven.
- pnako 7y ago
  Let me clarify my point a bit: the easier it is to measure the actual performance of an employee, the more their compensation will be linked to their performance. Take for example a company developing software. The variance in the compensation of the software developers will be lower than the variance in the compensation of the salespeople. That's because it's much easier to measure the performance of a salesperson. In most trading shops it's becoming more difficult to estimate the contribution of a single individual because technology is more important than before, and plays a role in how competitive you are. That doesn't make them any less talented, educated, hard-working, etc. It just makes it more difficult to know their exact contribution. Which means that their compensation will not necessarily fall down, but will become less performance-based.
  - anonu 7y ago
    I think were talking about 2 different things. Yes, technology is important - but these aren't simple systems - nor are they open source. In the trading world, as an employer you are disincentived to give the keys to your model - aka your secret sauce - to all your employees. You will reward only a select few who you trust to stay on board, manage the model, continuously improve on it to stay pace with the changing markets. If you give the keys to too many people, eventually they will jump to other shops, copy your ideas and your edge will deteriorate.

by pnako 7y ago

Really? It doesn't make much sense to have bonuses for automation since it's largely a group effort. And that's probably the main reason why those performance bonuses are disappearing.

scawf 7y ago

Automation = following model Whoever build a good model get a good bonus ?

pnako 7y ago
You're not wrong in the absolute; my point is more that designing, implementing and running a model, good or bad, is increasingly team work. So there is not a single 'whoever' behind that model.

anonu 7y ago

Soccer is a group effort, but you still have star players that get paid outsized compensation. Trading is very much about managing and taking on risk. Even if there are computers managing trading - managing risk is still human driven.

pnako 7y ago
Let me clarify my point a bit: the easier it is to measure the actual performance of an employee, the more their compensation will be linked to their performance. Take for example a company developing software. The variance in the compensation of the software developers will be lower than the variance in the compensation of the salespeople. That's because it's much easier to measure the performance of a salesperson. In most trading shops it's becoming more difficult to estimate the contribution of a single individual because technology is more important than before, and plays a role in how competitive you are. That doesn't make them any less talented, educated, hard-working, etc. It just makes it more difficult to know their exact contribution. Which means that their compensation will not necessarily fall down, but will become less performance-based.
- anonu 7y ago
  I think were talking about 2 different things. Yes, technology is important - but these aren't simple systems - nor are they open source. In the trading world, as an employer you are disincentived to give the keys to your model - aka your secret sauce - to all your employees. You will reward only a select few who you trust to stay on board, manage the model, continuously improve on it to stay pace with the changing markets. If you give the keys to too many people, eventually they will jump to other shops, copy your ideas and your edge will deteriorate.