Ample opportunities for equity derivative flow traders in 2010

The European equity derivatives market may have fared much better in the second half of 2009 than the first, but it's the coming 12 months when the sector is really tipped to grow. As a result, many investment banks are beginning to build their trading teams.

US research firm Greenwich Associates has just completed its annual review of the European equity derivatives market and is anticipating an increase in the use of flow products within the sector. A staggering 70% of institutions surveyed intend to increase their use of equity derivatives in 2010.

This year, the use of equity options by European institutions has increased by 16% on 2008, and 78% of investors now use the products, compared to 66% last year suggests the survey.

"These results suggest that the equity derivatives business in Europe should grow at (at least) a slightly accelerated pace in the next 12 months," says Greenwich Associates consultant John Colon.

As we noted a few months ago, there was a relative flurry of equity derivatives recruitment, even if it appeared that banks were merely replenishing teams after redundancies rather than actively expanding.

However, more recently there have been positive signs. In New York, Vuk Bulajic head of US equity derivatives at Natixis, has joined Ticonderoga Securities to launch an new equity derivatives desk. And Aurelien Bessot, formerly head of exotic equity derivatives at Bank of America in London is preparing to start his own venture.

We also understand that Credit Suisse, Morgan Stanley, Nomura and UBS are on the hunt for equity derivatives professionals.

"It's difficult to think of an investment bank that isn't hiring," says one equity derivatives focused headhunter who declined to be named. "There has been something of a merry-go-round in the second half of the year, but demand for flow traders has been particularly buoyant in recent weeks - at the senior end only currently, though."

But Matthew Williams, who focuses on equity derivatives at headhunters Sheffield Haworth, believes recruitment won't really pick up until the first quarter of 2010.

"Most recruitment has largely been replacement, rather than expansion," he says. "There is talk that it will pick up early this year, but concrete hiring plans are not yet in place."

According to the Greenwich Associates survey, Deutsche Bank and JPMorgan have the largest share of the European equity derivatives market, followed by Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch and Credit Suisse.