Attempts to clear backlogs in the credit derivatives market are creating a hiring boom for technology staff.
Recruiters say banks' pledge to automate credit derivatives trades is driving recruitment for business analysts, project managers and programmers familiar with credit derivative products.
"There's strong demand for people to work on credit derivatives systems," says John Carter, a consultant at recruiters the Hagan Ricci Group in the US. "And there's a shortage of people with the requisite skills."
Scott Gerson, CEO of NYC recruitment firm Focus Capital Markets, confirms the lack of suitable talent: "There's a real fight over people with good technical skills, a good academic background, good communication skills and good credit derivative product knowledge," he says. "Investment banks, hedge funds and vendors are all hiring."
Demand for credit derivatives technologists is only likely to increase. Prompted by the concerns of the UK and US financial services regulators, leading banks recently told the US Federal Reserve they would automate future credit derivatives trades and operational processes and clear existing backlogs by June.
There's plenty of work to do: the credit derivatives market has grown more rapidly than trading systems have been able to accommodate it. A recent study by the International Swaps and Derivatives Association (ISDA) found just 40% of confirmations in the credit derivatives market are automatically generated. Credit derivatives trades are more complex to clear than traditional vanilla trades because payments can be spread over time, there are often several counterparties, and trades need to be confirmed and then signed off by legal departments.
Robert Lycett, team leader on the banking and finance team at recruitment firm Elan in London, says hiring is currently highest for business analysts and project managers who can prepare the ground for new credit derivatives technologies. "Programmers will be needed in the next wave of banks' hiring," he says.
Third party providers of credit derivatives technology are also looking for staff. Calypso Technology, a San Francisco-based provider of derivatives trading and processing systems, has grown its London team from 10 to 25 people over the past year with hires from the likes of JPMorgan, Dresdner and Rabobank. Last month MarketAxess, which recently launched the first client-to-multi dealer electronic credit default swap (CDS) index trading system in London and New York, hired Andy Brindle, former global head of credit derivatives at JP Morgan.
Andy Nybo, a spokesman for MarketAxess in New York, says the firm has hired additional staff to develop the new trading system, and is likely to hire again as its CDS presence expands.
In a finite market, demand for technologists with credit derivatives expertise will put pressure on pay. "Everyone's going to be robbing from everyone else and bumping up the price," says Carter.
Gerson says a base salary for a credit derivatives programmer with four years' Wall Street experience is currently around $120,000, plus a $150,000 bonus. He says business analysts can expect a total package of $250,000 plus.