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Wall Street's Hiring in Derivatives. Don't Tell Anyone

No one on Wall Street wants to admit they're in a hunt for managers to work in the front and back offices of derivatives operations. Why all the secrecy? We've been trying to find out.

Could it be a scramble to beef up teams to combat the rash of trading errors? An annual survey conducted by the International Swap Dealers Association (ISDA) and released at the end of May showed an increase in the number of derivative deals that had to be re-entered due to errors. Credit and equity derivative error rates increased at large firms, reports ISDA, even while the overall error rate for credit derivatives seems to be following a downward trend since 2003.

Then Alan Greenspan, the exiting chair of the Federal Reserve, expressed horror at the amount of manual ticketing in the trading of credit derivatives, calling it, "19th century technology..."

Rebooking deals causes all kinds of problems in the derivatives business, because risk exposures have to reconfigured, as well as P & L and deal prices. In addition to credit derivative rebookings, ISDA said rebookings increased for non-plain vanilla interest rate swaps and equity derivatives.

The industry is apparently following the equities market's example in trying to set up an electronic system of trading and processing, beginning with order matching, to find and correct derivative deal errors more quickly. The same organization that helped bring this about in the securities markets, the Depository Trust & Clearing Corporation (DTCC), is leading this effort with interdealer brokers GFI, Icap and Tullett Prebon.

It might be that firms don't want to talk about their hiring plans because they're trying to keep their strategy close to the vest. Whatever their reasons, recruiters say all these developments make the affected areas - trade confirmation, middle office and back office operations - ripe for employment opportunities.

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