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Demand for Derivatives Reconciliation

It's no surprise that the post of derivatives reconciliation specialist is gaining in profile. According to the NYSE Euronext, March trading volumes for its global derivatives and cash equities exchanges grew at a sizeable clip. Of the 9.2 million contracts traded per day, the average daily volume (ADV) of global derivatives increased 11.9 percent in March 2011 as compared to the prior year.

ADV grew 2.5 percent from February 2011 to March 2011.

Much of the activity was due to the growth in U.S. derivatives business. The increase in global derivatives ADV versus prior year levels was driven by a 22.8 percent increase in U.S. equity options ADV and a 3.2 percent increase in European derivatives ADV. NYSE Euronext's U.S. options exchanges accounted for 26 percent of the total U.S. consolidated equity options trading in March 2011, up from 25.3 percent in March 2010.

Reconciliation specialists work closely with traders, as well as third party vendors, settlement personnel and in-house IT. A background in settlements and derivatives processing is essential, as well as strong tech acumen and problem-solving skills. Adaptability is also needed, given the ever changing regulatory environment involving derivatives.

While back office functions, like derivatives reconciliation, certainly aren't as glamorous and lucrative as front office derivatives positions, the spot is still a very critical, indispensible, and in demand one. Given the boom in the derivatives marketplace, it's clear that derivatives desks will not only need additional reconciliation specialists, but also reconciliation developers.

If you're looking for a heads-up on job opps, make sure to check out the major players in the U.S. derivatives market, including Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS.

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AUTHORMyra Thomas Insider Comment
  • Ca
    Casey
    30 May 2011

    Did Fannie Mae & Freddie Mac end their business in the market? Is SEC, COC or some other agency going to police derivatives now?
    FED & FDIC need to put something in place so a fiasco similar to Long Beach & WaMu don't happen again. FDIC should step forward and use some of the $7 billion & give smaller banks a chance to recover from the crisis. Buy their problem loans & reserve for loan losses to let them get their capital ratios up, instead of forcing them to go ask stockholders & capital markets to pony-up the new funds. Taking the loans off the books will help capital %s better & easier than looking for it in down markets. I think this is why it is taking a long time to recover. FED & FDIC are not providing the stated means of keying a recovery. Banks use any income they receive to reserve for loan losses from 2006 - 2009 & that leaves them no income to report as earnings. FED needs to purchase the toxic loans & get the recovery underway. Also, put some regulations out there for firms to review & decide if they address the problem of financing derivatives.

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