How Prestigious is Jane Street Capital?

What are they exactly? I don't understand what kind of shop they are, what kind of pay guys there get, how prestigious it is, etc...

There was a thread on them a couple months ago but I read it and still didn't know what they did.

Jane Street Capital Overview

Jane Street Capital is a proprietary trading firm in NYC. This means that they trade with the firm's internal assets. This is not technically a hedge fund.

Jane Street describes their business below:

On an average day, we trade over $13 billion in equities worldwide. We are also very active in the markets for options, futures, currencies, commodities, and fixed income. We are active participants on more than 200 electronic exchanges and other trading venues in about 40 countries around the world. We traded over $4.8 trillion across all products in 2016.

@Brady4MVP" explained that:

In terms of the work, they use quantitative methods to take advantage of an arbitrage situation. To put in the simplest terms, this means they take advantage of a situation where the relationship between two instruments is out of sync, thereby providing an opportunity for arbitrage. Jane Street trades a wide variety of products, but if I'm not mistaken, their largest activity is on stock and index options.

Prop Trading Interview Experience

@Brady4MVP" commented on the interview process:

It's very tough to get a job there. There are around five rounds of interviews, each one getting progressively harder. You will be tested on math, economics, probability and statistics. To put it simply, you have to be really sharp to land a job.

@kadgeratnum" explained their experience interviewing in a detailed post about the final round:

Before the interview I went through five(!) phone interviews before they invited me down, and I think they would have kept going except that I had an exploding offer coming up so I told them its final round or nothing... When they say 'we aren't looking for the right answer so much as how you think about a problem', they mean it. At the final round itself you are given 100 poker chips at the start of the day. Over the course of the next 4-6 hour long interviews (I only had four, but I think that's because I got cut after four - there were still people interviewing as I left) you have to use the chips to make bets on scenarios given to you. Some sources claim these scenarios can be as simple as 'make a market on the temperature in the room', I didn't get these questions and I'm guessing that they are reserved for internship interviews. I got much more difficult ones, that require a decent amount of math. You will need to use the trading terms to bet on the results you get.

@eecs" explained their summer analyst interview experience:

Their 4th round interview for a SA gig (yes 4th round for a summer internship) was almost like a Math Olympiad. Game theory, FORMAL proofs and some conditional probability.

Jane Street Prestiege Level and Salary

Jane Street Capital is a well regarded prop trading firm on Wall Street.

User @PowerInTheMoney" explained in a seperate post about the starting salary:

For the summer analyst role: the Jane Street Salary is 125k prorated, or 25k for 10 weeks (as of 2014)

@trdr1" explained their perception of Jane Street:

JSC has a reputation for paying very well and having high retention rates. This is why kids who get BB offers take jane over them.

@Brady4MVP" explained his perspective:

The training they give you may not be as comprehensive as what you would get at a BB trading floor. If you had the option, you should take GS, MS, ML trading or a top hedge fund over Jane Street, without a question.

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Jane Street Capital is a proprietary trading firm in NYC. This means that they trade with the firm's internal assets. Since there are no clients, they are NOT a hedge fund.

In terms of the work, they use quantitative methods to take advantage of an arbitrage situation. To put in the simplest terms, this means they take advantage of a situation where the relationship between two instruments is out of sync, thereby providing an opportunity for arbitrage. This is the type of trade which made tons of money for the guys at Long Term Capital but also led to their demise when spreads continued to diverge. Jane Street trades a wide variety of products, but if I'm not mistaken, their largest activity is on stock and index options.

It's very tough to get a job there. There are around five rounds of interviews, each on getting progressively harder. You will be tested on math, economics, probability and statistics. To put it simply, you have to be really sharp to land a job.

If you start off as a junior trader, you will get paid a base salary of around 45-50K. This is a paltry amount, especially for NYC, so you'll struggle at first. However, if you do well at Jane Street, you'll easily make six figures. The partners make seven figures.

I personally don't think Jane Street is that prestigious. The fact of the matter is, proprietary firms are small and have limited resources. The training they give you may not be as comprehensive as what you would get at a BB trading floor. If you had the option, you should take GS, MS, ML trading or a top hedge fund over Jane Street, without a question.

 

You pretty much lost all credibility when you compared what LTCM did to what these high caliber prop firms do (susquehanna, jsc, drw). Because A) LTCM didn't make markets (HFs can't make markets...the ones that do (aka Citadel) have external MMing units) B) not all "quantitative arbitrage" situations are the same. I am guessing you read "When Genius Failed" and pretty much equated arbitrage with that.

I suggest the OP read this topic which lists the areas jane street trades: http://nuclearphynance.com/Show%20Post.aspx?PostIDKey=92247&PageIndex=1

JSC also has a reputation for paying very well (which is why kids who get BB offers take jane over them) and high retention rates.

Read this topic: http://elitetrader.com/vb/showthread.php?s=&threadid=72233&perpage=6&highlight=jane%20street&pagenumber=1 And notice how the industry veteran on that NP thread laughed when some dude was "concerned" about the "low capital base". Once again, know what you are talking about.

 

excuse me my friend but LTCM had nothing fundamentally wrong...they were just a bit unlucky (a country does not default every day) and just a bit arrogant...you all read waaayyy too much of Liar's poker, When a genious failed etc....reading those books without understanding the fundamentals is disastrous.

 
GGD:
excuse me my friend but LTCM had nothing fundamentally wrong...they were just a bit unlucky (a country does not default every day) and just a bit arrogant...you all read waaayyy too much of Liar's poker, When a genious failed etc....reading those books without understanding the fundamentals is disastrous.

Just a bit unlucky? Oh please, there is sucker born every minute i suppose...

 

very good firm. do you go to MIT or something? most if not all traders at Jane pretty good with functional programming and seem to know their way around OCaml or similar

 

well, i'm not saying Jane Street exclusively recruits from MIT, but they seem to value mathematical aptitude like none other, so I thought it was a pretty good guess on my part

 

They recruit at a few other ivys too..they recruit at mine (Penn). I'd agree that they value mathematical aptitude (they interview a lot of engineers).

 

I did not know there were that many people on this board who should or would even know what course 15 is. Wow, I guess I am not alone.

 

college for me was a matter of deciding between wharton and mit, so course 15 isn't a huge mystery to me haha. zonk: i've always heard that Jane Street interviews were more complicated than that with questions involving algorithms, geometry problems, and whatnot.

 

wharton. was in the management and technology program before bailing and am now going for a double concentration in finance and statistics.

 

maybe 2nd rounds it gets more complicated. i basically stopped after i got a series of just plain multiplication and addition. not how i want to think. know people there though that do well.

 

The firm is pretty good, but I would not consider it on par with Shaw or other very large funds. The amount of money they manage simply cannot allow as much upside.

 
omega:
The firm is pretty good, but I would not consider it on par with Shaw or other very large funds. The amount of money they manage simply cannot allow as much upside.

lol, no you're quite wrong here

 

the bottom line is, it seems like these guys rock based on what i've heard from interns and the general (finance) public. i respect the firm and anyone good/lucky enough to get in. that being said, what does "well capitalized" mean in terms of this firm? anyone have any idea how much capital they're really playing with?

 

"lol, no you're quite wrong here"

Are you honestly telling me you would take a position here over Shaw? If so, I think you are quite dull witted. I know people working at Jane who say it is "near the level of shaw"

 

isnt deshaw a hedge fund? Why are you comparing Hedge funds to prop firms?

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 

Lets work out profit per capita to get an idea of what I am talking about. Shaw = 1300 employees, 35 billion under management. Lets say they return a very conservative 10% per annum. That would be 700 million from the 2% of assets and 700 million from 20% of profit, so on average 1.1 million per person.

Jane has 100 employees and 150 million under management. Even giving them the astronomically high return of 50% per annum (which I am certain they cannot achieve consistently), the average comp is substantially lower (0.75 million per person).

 

Large funds also temper down volatile to manage pension fund and extract their alpha thru fees.

If Jane was returning 61% per year on their capital (minus tax) and compensation then the real pre tax returns are likely around 200% a year.

There was a guy name Igor around Chicago for a while who came out of sig and I’m guessing did similar strategies but smaller firm. He had 20 million in real estate after a few years at the Waldorf.

 
Best Response

But what you fail to realize is that their in inequality. At shaw your general partners will a greater % of the compensation than at Jane Street. Since Jane Street is a prop firm it is likely that their distribution of income is more normally distributed compared to Shaw. I would argue that median income is potentially higher at Jane Street assuming the average return. Furthermore if Jane Street has grown from 2mm in 1999 to 150mm now in 2008 thats average annual rate of return of 61%. yeah, bottom line your average person at Jane Street is likely better off than your average person at Shaw. But your superstars at shaw clearly are way better off than Jane Street.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 

Their 4th round interview for a SA gig (yes 4th round for a summer internship) was almost like a Math Olympiad. Game theory, FORMAL proofs and some conditional probability.

Needless to say I wanna work there now even more!!

 

For those computing fee figures at Shaw you should be using 3%/30% vs. the standard 2%/20%. Despite charging fees well above average, Shaw still generates above average returns and raises big $$$ from investors. And, of the 1300 employees, ~500 of them are based in India and even the best over there probably get paid a fraction of what people on this board would consider reasonable. This leaves a much greater pool of dollars to pay everyone else.

I don't know Jane Street and can't help with the per capita calcs that were being done above but I find it hard to believe that the ratio would be higher at Jane Street vs. Shaw.

 

As Steve Tyler of aerosmith once sang "Janie's got a gun", well if what i just read is correct, "Janie's got a put" would be more correct. Not sure long or short puts but this trade could really make or break them.

"Jane Street Capital LLC, a New York-based trading firm, had the biggest exposure to Bear Stearns's put options at the end of last year, according to regulatory filings, though it isn't clear if the firm held on to those positions through last week. "

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
 

FYI, Jane Street currently has 2 bil + under management. They had their best year ever in 2008. Since their founding, they always used about 10% of revenue for insurance such as buying extremely out of the money puts on the S&P and counterparties along with CDS on counterparties. The purpose of the insurance was so that they could survive a meltdown of the financial markets. Turns out that their normal business wasn't significantly impacted by the events of this year but their insurance still made them ridiculous amounts of money.

 

I am graduate student ( doing Ph.D. ) from a premier mathematical research institute in INDIA. The focus of my research is mathematical finance and its applications in stock-market, derivative pricing,hedge funding,and like. So, I also started doing CFA ( to gain more insight from pure finance persepective ). I have completed LEVEL 2 of the exam. I heard about JSC during one of the examinations of CFA. I wanted to know that can I apply for this company? I have already spent enough on my studies and now have support my family ASAP. So,what do you guys think - should I apply for this job? If yes, then tell me frankly about my chances of being selected and how much money will I be making?

 
moiafdrdo:
I am graduate student ( doing Ph.D. ) from a premier mathematical research institute in INDIA. The focus of my research is mathematical finance and its applications in stock-market, derivative pricing,hedge funding,and like. So, I also started doing CFA ( to gain more insight from pure finance persepective ). I have completed LEVEL 2 of the exam. I heard about JSC during one of the examinations of CFA. I wanted to know that can I apply for this company? I have already spent enough on my studies and now have support my family ASAP. So,what do you guys think - should I apply for this job? If yes, then tell me frankly about my chances of being selected and how much money will I be making?
Sorry to bring to life such an old thread. Just did a search on JSC and got a kick out of the bold part...
-MBP
 

I was hedge funding the other day and ended up with enough money to pick up a tub of Scott's and revive the foliage in my front lawn

I hate victims who respect their executioners
 

HAHA "just a bit unlucky". Their fault was discounting tail risks. They did have something fundamentally wrong....the distribution they used to base their decisions was false (just use excel and look at the distribution of returns...its fattailed).

However, when I said that he had no idea what he was talking about it was because the type of trading LTCM did is just absolutely different from what shops like Jane Street do. The type of "arbitrage" LTCM did isn't actually arbitrage. They placed relative value bets based on fair values generated by their models (which were flawed as they used the normal distribution as the basis). On the other hand, these prop firms often derive a lot of their income from making markets. In any market, the real value lies somewhere between the bid and the ask price. Therefore, market makers are compensated for providing liquidity to the markets (and have a quantifiable edge-the spread).

Of course, the large prop firms run a gamut of strats (which are outlined in that NP thread). Susquehanna even branched into banking and equity research.

 
maxmatsuk:
how can i get into the jane st training program without a college degree, is it possible to pay them to train me and than if i have potential to hire me?

sir are you out of your mind?