Volatility pays for equity derivatives traders

Equity derivatives traders may see their bonuses boosted by the recent upturn in stock market volatility.

"Equity derivatives traders are certainly benefiting from volatility in the markets," says Malcolm Pace, a specialist equity derivatives recruiter at Malta-based search firm Melita Associates. "Trading volumes are up, revenues are increasing, and so automatically bonuses will increase."

Europe's largest equity derivatives exchanges experienced record trading last month as investors sought to hedge against volatility, according to the Financial Times.

Is this just a temporary blip? Not necessarily. Investors such as pension funds are entering the sector for the first time, leading to long term growth.

Pace says that at present equity derivatives traders with two to five years' experience can earn 200,000-400,000 a year in total compensation. And if trading volumes continue to rocket, bonuses may yet follow.