As 2011 begins, financial reform and consolidation remain two of the biggest transformers of the industry. But how will they the impact jobs on the Street?
IT Pros Love Financial Reform
Expect Dodd-Frank to be a boon for financial tech professionals. Swap Execution Facilities (SEFs) are their new creation - basically a transparent clearinghouse for swaps. An inevitable beef up in personnel is coming at established players and new folks are needed at firms entering the fray.
Financial reform's also brought us the brand spanking new Office of Financial Research within the Treasury. It's charged with collecting data on transactions and positions of financial institutions, especially designed to track the market in what were previously considered hard-to-value and shadowy financial transactions.
The OFR's long-range aren't yet known, given that the office is still in its infancy. But expect the need for technology professionals to grow as banks and investment firms work on the capture and storage of data, as well as the effort to conform to the OFR's standardized financial reporting requirements.
Big is Bad
Last year brought about some unique mergers, and 2011 will probably bring much of the same. Whether it's small and mid-sized banks, IT firms, investment firms, or the exchanges, consolidation's been the order of the day. But while joining forces might boost the bottom line, it's rarely a good thing for the folks working in operations.
Currently, Chi-X Europe, one of Europe's largest equity exchanges, is up for auction, with BATS Global Markets in negotiations to purchase it. Given there are institutions still teetering on failure, expect additional consolidation in the banking world. Healthier counterparts will continue to snatch up deals. Watch redundant heads go.
Mergers also result in smaller competitors being blown out of the water. Take the NASDAQ OMX Group's purchase of FTEN. The deep pockets and power of the exchange are a boon for FTEN, but it's sure to present significant competition for smaller real-time financial securities risk management firms. There's also a shrinking marketplace for broker OMS providers.