Jump Trading, a quiet leader in the HFT world

‘Highly Sought’

“Jump is among the high-frequency trading shops that is highly sought after by our candidates, who’ve often told us they have a very strong work-hard-and-reward-hard culture,” said Deepali Vyas, founder of VnV Partners, a recruitment firm in New York.

While Jump describes itself as having a “casual atmosphere and flat organizational structure,” according to a former version of its website, it has an unusual setup compared with rivals.

Jump rents out computers and other infrastructure to its traders, who are organized into independent trading teams. The groups operate as separate cost centers and are staffed by as few as two people or as many as about 20, according to two former employees. Some groups trade across markets while others focus on one.

Jump applies its secrecy ethic within the firm. The teams don’t share information about trading strategies with each other -- profitable groups are rewarded with more technology or money to trade with, former employees said.

Founders’ Teams

DiSomma and Gurinas sit with the traders and each have their own teams. Jump Core Strategies, run by Gurinas, caused resentment within the firm because of the growth of its assets, former employees said.

Among the successful teams are Statistical Trading Group, or STG, which has been run by former Citadel LLC traders Tom Gallagher and Satyanarayana Dharanipragada. Other groups have been led by Igor Pavlovsky, a Massachusetts Institute of Technology graduate who trades currencies, and ex-Citadel employees Ken Terao and Alexei Kamenev. Messages left for Gallagher, Dharanipragada, Pavlovsky and Terao weren’t returned, and Kamenev declined to comment.

An exodus of employees to Jump from Citadel was the subject of a clash between billionaire Ken Griffin’s Chicago hedge-fund firm and Jump in 2012. Citadel said former workers may have taken proprietary trading strategies and computer code worth hundreds of millions of dollars to Jump. Jump said that Citadel was misusing the courts to get information on a competitor.

 

James Chiu

An Illinois judge rejected Citadel’s bid to compel Jump to identify ex-employees who joined the firm since 2005, and any strategies they later developed. The case was dismissed in October 2012.

At Jump, James Chiu -- whom ex-employees said was in the trading firm’s Oceans group -- broke CME Group rules in 2010, according to a CME Group disciplinary memo from 2014.

A CME Group panel found that from Aug. 30 through Sept. 15, 2010, Chiu manually entered orders, supplementing trades that he had already placed, then canceling them before his other orders could be executed, the exchange said in a March 3, 2014, notice on its website. His actions potentially disrupted the market, the panel said.

The exchange said Chiu was employed as a proprietary trader by a member firm, but didn’t name Jump in the disciplinary action. The panel found that Chiu broke the exchange’s rule prohibiting “dishonorable or uncommercial conduct,” among others. Chiu, whose LinkedIn Corp. profile says he was a former team leader at Jump, settled with the CME Group without admitting or denying wrongdoing. He was ordered to pay a $155,000 fine and was suspended from any trading on the exchange’s markets for two months.

Predicting Future

Chiu, who now runs his own proprietary-trading firm, Vatic Labs, in San Francisco, said in a phone interview that CME Group issues disciplinary actions all the time and his was nothing out of the ordinary. Vatic is a word meaning something that describes or predicts what will happen in the future.

About two months after the CME Group rule violations that Chiu was later punished for, DiSomma, Gurinas and Schrecengost met with then-chairman of the CFTC, Gary Gensler. They discussed the definition of spoofing -- or illegally canceling bids and offers quickly after placing them in order to create a false impression of demand -- as well as high-frequency trading and the May 6, 2010, market plunge known as the flash crash, according to the market regulator’s website. The meeting was part of the regulator’s efforts to implement new market rules stemming from the Dodd-Frank Act.

As for his old firm, Chiu hewed to the company line.

“I’m not allowed to talk about my time at Jump,” he said.

 
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