With new regulations reshaping the market for Wall Street's riskier products, jobs in derivatives would appear to be in short supply. Credit derivatives are a thing of the past, and banks such as Goldman Sachs have shifted to derivatives clearing and market-making.
Yet, despite tighter rules, banks in Europe are hiring. And, areas such as equity derivatives, while becoming commoditized, have become launching pads for new business in other parts of the bank.
French banks SocGen and BNP Paribas, as wellas as middle-market firm Jefferies have each ramped up hiring in derivatives. SocGen recently landed Timothy Gee, a veteran equities and derivatives executive with stints at UBS and Morgan Stanley, to handle equities execution in the Americas. Meanwhile, BNP Paribas reorganized its global equities and commodity derivatives business, hoping to build its profile in this space. For its part, Jefferies, recently launched a futures division and is said to be hiring in derivatives.
Banks are viewing equity derivatives as a way around the high cost of building an equity cash business, says Richard Lipstein, of Boyden Global Executive Search.
"If you need to be in the equities business, derivatives gives you access to corporate clients in a way that no other business on Wall Street can," he says.
Nevertheless, structured equity derivatives businesses face headwinds due to Dodd-Frank. Many believe the new rule could push banks to place their structured equity derivatives operations into different businesses. That would play to strengths for SocGen, BNP and Goldman Sachs, which can provide liquidity.
"We've seen a slowdown, but are still seeing activity pick up as European companies are looking for people," said Michael Karp. He echoed the belief that there is a healthy supply of jobs in the market.
European banks see the tighter rules as an opportunity to grab market share in derivatives, and poach talent as banks like Bank of America impose cuts.