The bottom-heavy world of credit derivatives quants
Junior quants all want to work in credit derivatives, and it's pushing down their pay.
According to a salary survey from recruitment firm Napier Scott, a credit derivatives quant at managing director level in a tier-one bank can now expect to take home a salary of around 140k plus a bonus of 865k.
An equity derivatives quant at the same level will pocket a similar basic, but a more diminutive 840k bonus.
However, as you move down the managerial food chain, equity derivatives quants come out on top. Napier Scott says an associate director in credit derivatives earns on average 85k plus a 95k bonus. By comparison, associate directors in equity derivatives earn 80k plus a handsome 140k bonus.
It's all because junior quants want to go into credit derivatives rather than equities, says Shaun Springer, chief executive officer of Napier Scott. "The amount of business in equity derivatives has increased enormously in the past three to four years," he says.
"Yet juniors are more likely to want to move into the credit derivatives arena because of the potential earnings at the end of it. So there has been a general shortage of people focusing on the equity derivatives side and it has been harder to attract people," Springer adds.
He says the situation is likely to change as awareness of packages on offer in equity derivatives rises and junior quants flock to equity derivatives instead.
For both product areas, recent salary increases are liable to run out of steam.
"Salaries have been really high but, I think, are going to drop off a bit this year or next. These things tend to go in cycles," says Rachel Biernacka, head of the quant desk at search firm Huxley Associates.
Average salaries: quants in tier-one banks
Equity derivatives
Managing director : 140k salary plus 820k bonus
Executive director : 110k salary plus 535k bonus
Director : 95k salary plus 250k bonus
Associate director : 80k salary plus 145k bonus
Associate : 75k salary plus 45k bonus
Credit derivatives
Managing director : 140k salary plus 865k bonus
Executive director : 100k salary plus 450k bonus
Director : 90k salary plus 200k bonus
Associate director : 85k salary plus 95k bonus
Associate : 70k salary plus 30k bonus
· Source: Napier Scott
