I had profit share(20%) deal. This was far below the industry standard(35-50%) because I was unaware. I was paid 20% as agreed upon. One and a half years later, I found out they had heavily inflated the trading cost in the trading UI. Then I asked for detail, however they kept delaying it for more than a year and then paid me 20 lk and said all done! The amount was in crores. Twice the amount of profit, shown in the trading UI, was shadowed under the trading cost. Actual profit was around 3 times the profit shown in the trading UI. They increased this cost around a month after we made this 20% deal in Sept of 2018. In the last week of Oct or first week of Nov(I don’t remember the exact date) everything went into loss all of a sudden. We were stunned due to this sudden decline. The MD was fully aware why this happened but kept his mum. We wasted months re-optimizing algos, building new models to bring things into profit again. However performance(i.e. profit to cost ratio) never restored. I found out about this cheating during COVID lockdown when I came across the cost structure in NSE website(https://archives.nseindia.com/content/circulars/FA56129.pdf). I went back to check from previous screenshots of the trading UI that cost was little over Rs. 49/lakh(near the maximum set by NSE which was Rs. 50/lakh at that time) before the deal. They increased it to over Rs. 57/lakh, a month after we made the profit share deal. Since HFT is spread scalping and they increased the cost beyond the spread, most of the profit got shadowed behind the trading cost. Before they increased the cost, profit to cost ratio was around 2. After they inflated the cost, profit to cost ratio fell down below 0.4.
This is not the only point of thievery. They deduct server cost from the profit before calculating% share. They had heavily inflated this cost(actual cost can be found out from NSE website; https://nseindia.com/trade/platform-services-co-location-facility). On top of that, they add multiple servers to a trader’s list of servers for few minutes and then deduct full day cost of the same server from multiple traders. Then I accidentally stumbled upon some log files(one member of the infra team shared some log files with me probably by mistake) which were generated with my model, however the servers on which they were generated were unknown to me. The infra team was running my models on some other servers without telling me so that they wouldn’t have to share any% of the profit. The infra team was in complicit with this thievery especially the head of the infra.
Even though the deal was 20%, I estimated they were paying me only 4-5%(I made an approximate estimate that the cost should have been around Rs. 35-40/lakh whereas they were charging over Rs 57/lakh). So I put my foot down and asked for the access to the server where all the log files, generated during trade, are kept to determine the turnover from which actual cost could be calculated. I even wrote a code to analyze all the log files. But they FIRED me. I was the TOP performer in the Quant team, contributing towards half of the Quant team’s profit and they fired me because I asked for the log files.
Interestingly, I came to find out that I was fired more than a month later. My models were still contributing 25-30% of the Quant team’s profit(performance fell down because I stopped updating models and waiting for the log files after finding out about the cheating). I still have the screenshots of the trading UI from Nov 2021. The gross profit was around 2 Cr for Nov. The trading cost was 1.5 Cr(profit to cost ratio: 0.33, this is where the majority of the cheating took place) making the net profit 50 lk. My share for Nov, after deducting the inflated server cost, was still over 7 lk. In the first week of Dec, when I didn’t receive payment, I asked what happened to my payment. On 9th Dec they sent me a position termination letter that they had already fired me on 31st Oct!
Not only did they cheat me of at least 3-4 crores in the previous 3.5 years run of my trading models, they also stole the full amount, the models were going to make in the next 2-3 years. I spent night after nights in the office, developing models. They FIRED me(without any settlement even though my models were making crores of profit at the time) and TOOK EVERYTHING.