Diving into derivatives
The Gulf's fledgling derivatives market is tipped to explode, but the infancy of the industry means talent is being shipped in.
Arqaam Capital, a Dubai-based investment bank established in 2004, has tipped the GCC's derivatives market to reach around $250-300bn - or 25% of total stock market trading volumes in the region - over the next five years.
Arqaam is touting itself as a pioneer of structuring derivative products for the region, a step few firms have thus far been willing to take due to the complications surrounding shariah compliance.
Laurent Dambly, Arqaam's executive director - capital markets, says: "The derivatives market within the GCC is at the early stages of development, but has the appetite to mature and develop, given the influx of global and regional players prepared to use derivative products for the first time."
Credit Suisse also expanded its derivatives team in Dubai in January. Simon Yates, head of global derivatives at the firm, says: "The Middle Eastern business requires a more rigorous process for structuring products, due to local laws. Many products need to be invented from scratch."
But though local investors might have an increased appetite for sophisticated products, Dubai doesn't have the expertise locally to construct or trade them.
Marc Hoodless, human resources director at Arqaam, admits western markets had to be tapped: "Most of the recruitment in our derivatives department has from been from outside the region. The market is in its infancy, so finding talent locally is very difficult as there simply isn't the experience here."
Local financial services recruiters echo this sentiment. Rob Glenn, senior consultant at RP International, says: "Firms are taking on people at a senior level and as junior traders. The senior people will be seasoned derivatives traders from western markets and will train the juniors. But these guys want serious money and very often firms won't want to pay it as the market's still a relatively unknown quantity."
Last year the Kuwait Financial Center called on other GCC countries to embrace derivatives: "The absence of the short-selling activities in such markets does not allow investors to enhance their returns during the down-trend," it said. In May, Evolence Capital launched a $150m fund to invest in equity derivatives.
Senior derivatives traders' packages come in at $500k to $900k, while junior traders are likely to get between $70k and $100k, with a 50% bonus.
