Queasy time for quant developers

Is the credit crunch good or bad news for the techies who helped build discredited derivative valuation models?

The verdict is mixed. If the number of traded structured products declines, it's safe to assume demand for quant developers will fall. But in the short term James Parker, manager of technology and consulting at recruitment firm Robert Walters, believes difficult conditions could actually prove a boon for quant development professionals: "If we have seen the worst of the volatility, a lot of people will be looking to reassess their mathematical models and do improvements around counter-party credit risk modelling," he says. "That's a market that's already very active, and we could see a real growth in demand for candidates."

Quant developers build the mathematical models required to price complex derivatives transactions, forming a vital part of many banks' risk assessment processes. However, with many structured credit products now untradeable, those models have been thrown into question.

For the moment, however, Dave Pye, chief executive of Highams Recruitment, confirms the outlook appears promising - particularly for quant developers working on a contract basis.

"So far, we haven't seen any fall in demand at all for permanent or contract positions," says Pye. "In fact, we're seeing an increase in demand for contract positions, because people are forging ahead with projects without necessarily waiting to recruit a permanent candidate."

If the market turmoil continues, all recruitment budgets could be under pressure. But Parker says quant development jobs should be well placed to withstand any rout. "The good news for quant developers is that good candidates will still be in demand," he says. "Counter-party credit risk modelling is a key part of any bank's overall profit and loss, and the models it relies on are vital," he says. "Whatever happens to recruitment budgets, people will reassess those models."