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For the average Australian, the name Optiver is not instantly recognisable. But on university campuses you are more than likely to see T-shirts sporting the logo of the financial services group, which specialises in arbitrage trading of equities and derivatives.
Of the 8000 people who applied for a job at the Sydney firm last year, most were straight out of university. Considering the firm has only 180 employees, and expects to expand to about 250 over the next few years, the competition for slots is fierce.
Globally, the Amsterdam-based group competes with organisations such as Merrill Lynch, Goldman Sachs and JPMorgan for the best and brightest students. In Australia, the firm also competes with investment banks – particularly Macquarie Group – which provide fierce competition for talent, since they are all dipping into the same pool of the top 5 per cent of graduates. Like the large investment banks, Optiver also recognises that its people are its business, so it likes to look after them.
Optiver Asia Pacific chief executive Paul Hilgers says he wants staff to look forward to coming to work, and there is no lack of challenge for two important components of the business, the traders and information technology experts. However, another area is growing in importance: compliance.
In the United States on May 6, the Dow Jones Industrial Average fell 700 points in 10 minutes as pricing for exchange-traded shares suddenly became uncertain. Computer-driven trading firms such as Optiver have been blamed but why the markets failed is still not clear.
It’s fair to say arbitrage traders are being watched more closely by regulators but Hilgers is not too concerned. He says the regulators consult with industry and are well informed on how the different markets work. But he is not so relaxed about politicians. If they get involved in the process, they tend to come from a position of having to be seen to act, which can quickly cause disruptions and distortions in markets.
Optiver’s traders go into markets such as equities and bonds, and derivatives such as options and futures, and create liquidity by constantly setting prices for product then moving rapidly in and out of positions, collecting margins on the price differentials between the same asset class in different markets.
The Sydney operation trades in markets in Australia, Hong Kong, Singapore, Taiwan and Japan. Globally, the group has hubs in Europe and the Americas.
The direction of the market matters little to the trading group; of prime importance is the volume of business in a market. Volatility also makes the trader’s life easier as differentials in price for a product are more likely to emerge.
Technical staff, who outnumber the traders, come up with algorithms that increase the speed at which traders can execute an order, and upgrade the group’s electronic systems. Speed and leading-edge technology keep operations such as Optiver ahead of the competition.
Traders’ profits are easy to track, but Hilgers says there are systems tracking the value of IT’s contribution. At the end of the year, everyone shares in salary bonuses, and Christmas presents and trips are common.
Nonetheless, there is more to keeping staff motivated and happy than an indulgence once a year. In day-to-day operations, Optiver seeks to create a work-life balance. The walls are covered in creative photographic and modern art. There are relaxation centres on each of four floors, plus a games room complete with competition race track computer consoles, a pool table, a big screen for videos and sports games, and a bar that is thrown open on Friday afternoons.
Hilgers is also keen for staff to be positive and energetic, so he promotes an active lifestyle. Gym memberships are supplied, there is fruit and healthy food available for breakfast and lunch and massages are available twice a week.
Since most staff are recruited directly from university, Optiver does have a young mindset but there is considerable diversity. Human resources manager Irene Frisby says it’s not just finance graduates the group looks for.
“A lot of people who sit down for an interview do not know about options but that’s OK, we can teach them,” she says. “An interest in finance is good but essentially we are looking for very smart and innovative people. We have staff with mechanical or electrical engineering, commercial science and even medical degrees.”
As part of a global operation there is also a stream of visitors from overseas and Frisby says 10 to 15 different nationalities are normally working in the office.
Despite its abundance of generation Y staff, Optiver is not a new-age firm where everyone works on a laptop from home. Innovation is as important as profits for the group if it is to compete, so Hilgers needs everyone in the office sharing ideas and working as a team.
There are only three levels within the business – the senior executive, team leaders and the teams – but Frisby says within those layers there is plenty of scope for individuals to shine and be rewarded. An internal coaching and mentoring program has also been developed to support all employees.
Other work-life advantages include additional leave for tenure, sponsored sporting teams, casual dress, and monthly and quarterly
team-building exercises such as white-water rafting, an annual winter trip and an annual poker tournament.
Optiver started in Australia in 1996 with six staff and one computer – and there was only one IT expert. Today the Australian operation represents one of three hubs globally and accounts for slightly less than one-third of total employees. The company is particularly strong in IT locally, and new platforms and algorithms designed for speed are introduced globally. There is also scope for staff to work abroad.
Hilgers says arbitrage trading can be a stressful job and requires a lot of concentration but that staff don’t spend 14 hours a day behind a screen and take stress home with them. At the end of each day as the market closes, the company’s arbitrage positions are balanced out so that it matters little what happens overnight in other markets. “The perception of the Wall Street trader works well in books but it doesn’t translate well into the workplace,” he says.
Nevertheless, Frisby says trading does get into the blood, and that when traders are brought to the universities to show potential recruits how arbitrage works, they are champing at the bit to get back in front of live screens. “Once we get them in the door, we often have to tell them to go home.” And it is a remarkable setup the traders have at head office, with six screens for each trader and a host of screens around the “trading floor” showing what is happening in different jurisdictions around the globe.
Proprietary trading, where there are no clients and a firm risks its own and investors’ capital, has become more prominent in recent years and firms have realised they need a brand presence to attract top graduates. For Hilgers and his team it means getting on the conference circuits, talking to regulators and building brand recognition.
“If you’re building brand, you want staff who support it,” he says. “I want people to get to work with a smile and say ‘great, I’m here’.”
Hilgers says his door and the doors of all senior managers are open to all staff, and every new idea is taken seriously. “Working for a firm like ours is not for everyone,” he says. “But the people who join us get a lot of engagement and become very loyal, and that’s something we really appreciate.”
As a screen-based business in an office, there is not a lot of opportunity for the company to go “green”, which in the past decade has become more important for university students entering the workforce. However, the group is increasing its charitable work. The main organisations to which Optiver offers services and financial assistance are Social Ventures Australia and the Beacon Foundation. Both offer support services to children and Beacon is particularly close to the heart of the business as it encourages disadvantaged kids to stay within the educational system.
“We have had a number of in-house days throughout the year,” Frisby says. “We invite groups of year 10 students in for the day to introduce them to the world of finance. The day consists of a tour of the building and a presentation on what we do. The groups are then split up and our employees sit with them to talk about their area of the business. We have run mock interviews, trading sessions and a trading game. It’s a relationship we will grow.
“Also, at the end of each year we ask all our employees to nominate 10 charities and we make a donation to each of them.”