How much am I worth? Derivatives product controller, international bank

A panel of headhunters gives its assessment of typical London pay packages: Salary - 50,000 rising to 65,000 for those with three or more years experience; bonus - 15%-25%

'Fool's Gold: How credit derivatives are misleading bankers' runs one headline. 'Derivatives: a crisis waiting to happen?' asks another.

With publicity like that, you might expect banks to start fighting shy of the derivatives phenomenon that has bought them huge profits and given telephone number salaries to a growing number of City professionals.

But what most have done instead, pushed by the Financial Services Authority in the UK and regulatory authorities in other countries, is increase the size of their middle office to ensure that all the flashy new instruments being devised and used by their star traders are kosher and above board.

Jamie Risso-Gill of Robert Walters said: "The market for derivatives product controllers has really taken off in the past two years as banks have recognized the need to scrutinise new products closely: there's just too much at stake.' He said the typical bulge-bracket institution now employs between 50 and 100 such people.

Richie Holliday, an associate director at Morgan McKinley, said the current quarter is already turning out to be one of the busiest for hiring, putting star candidates at a premium and driving salaries and total compensation levels upwards.

"Increased activity has been seen across all finance areas...(with) demand for staff with derivatives experience - particularly middle office roles - reflecting growing activity from the business," he said, adding that fixed income derivatives (either interest rate or credit) and equity derivatives were the main product growth areas.

So what type of person becomes a derivatives product controller? Risso-Gill suggests the most successful will be that rare somebody with a very strong maths background who has gone into accountancy, enjoys the challenge of looking at complex new products and possible trades in detail - but with good interpersonal skills and the ability to deal with traders at all levels.

Also of use, on top of excellent A level results (in mathematical subjects) and a first class accountancy or accounting-related degree, would be a CFA (Chartered Financial Analyst) qualification, or at least the desire to acquire this.

Absolutely key is a flexible and inquiring mind, coupled with an outstanding ability to grapple with and understand complex products quickly and with accuracy.

Risso-Gill said: 'Typically, they (controllers) look at the trader's P&L (profit and loss account) and reconcile it with the back office records before signing it off for the company. Value is added through their in-depth analysis of the P&L to check possible over-exposure and in the testing of new products.' .

Not surprisingly perhaps, the salaries of derivatives product controllers have risen quite sharply, with newly qualified accountants going into the field typically earning a base starting salary of around 50,000, with bonuses running between 15%-25%.

This is obviously a fraction of what front office staff can pull in, but then middle office staff don't have the same stress, long hours and weekend work that many in the front office have to endure.

On the bright side derivatives product controllers can be reassured that employers see theirs as an absolutely essential function, not something to be cut in bad times. This, coupled with the shortage of qualified people able to properly understand derivatives and the continuing popularity of complex instruments, suggests both salaries and job prospects will remain buoyant for the foreseeable future.

Figures and commentary by Morgan McKinley and Robert Walters