Technologists could suffer in Euronext nuptial

Euronext says as many as 5,000 derivatives jobs could be lost if it succumbs to a shotgun wedding to Deutsche Börse. Our sources say this is not entirely realistic: derivatives jobs should be safe. IT roles may not be, however.

"It's a huge exaggeration," says one derivatives headhunter in London. "There are a hell of a lot of derivative transactions that take place away from exchanges. They are the most lucrative ones and they won't be impacted at all by this merger."

Euronext is claiming that a forced marriage to Deutsche Börse will see the German exchange subsume Liffe's London operations into its Frankfurt-based bosom, placing all London derivatives-related jobs at risk.

Is this scaremongering? The Economist says 98% of Euronext's trading in derivatives took place in London last year, suggesting it may not be. However, the magazine also says London accounts for over 40% of the global daily turnover of off-exchange derivative trades. The value of these over-the-counter (OTC) trades is four to five times greater than trades made through exchanges like Euronext, and as noted above, would not be affected by the merger.

This doesn't mean the risk to jobs is zero. David Lascelles, co-director of the Centre for the Study of Financial Innovation tells us he's most worried about back office jobs: Deutsche Börse has said it would transfer Euronext's technology to the Eurex platform in Frankfurt.

Lascelles reckons financial centres' geography doesn't matter: what matters are the people who initiate the transactions. Deutsche Börse has said 40% or 50% of its transactions already originate from London. As a result, he predicts the really valuable jobs in the front office will stay here.

Our headhunter source agrees: "Derivatives require complex trading models, structurers, originators, and marketers. The vast majority of these are in London. That won't change overnight."