Where will the financial jobs be? Exchange traded derivatives

Where should you position yourself if you want to be the beneficiary of hiring between now and 2013? Try exchange traded derivatives. They're hot. And getting hotter.

What?

Exchange traded derivatives are derivatives that are traded on public exchanges. Traditionally, they have been simple things like futures and options but the exchange traded sector is about to be transformed by regulations mandating that more complex Over The Counter (OTC) derivatives are traded on exchanges too.

Why?

In the US, Dodd Frank is pushing OTC derivatives onto exchanges and through centralized clearing houses.

In Europe, there's a range of equivalent regulation, says Roger Barton of the Financial Reform Consultancy. Most important is EMIR or the European Markets Infrastructure Regulation and the MiFID II.

In combination, all this legislation means that derivatives which were previously traded privately, off exchanges, will now need to be settled through exchanges and cleared through central clearing facilities. Banks are rushing to adapt to this change.

"While there are likely to be some differences between the arrangements for central clearing and trading of OTC derivatives and existing exchange traded derivatives, there is sufficient commonality that a number of banks and clearing firms are pushing their exchange traded and OTC businesses together," claims Barton.

Who's hiring?

The big recent excitement in the exchange traded derivatives world was Citigroup, which re-launched its exchange traded derivatives business earlier this month and revealed that it had poached 14 bankers - mostly from JPMorgan for the area. (This followed Citi's poaching of Jerome Kemp from JPMorgan to a newly-created position of head of exchange traded derivatives sales and clearing last October.)

Also expected to hire is Jefferies, which recruited Matthew Podmore from JPMorgan for its futures division in April. And JPMorgan is expected to hire some replacements.

Who's hot?

Much of the hiring in the exchange traded derivatives area involves technology, business analysis or change management roles. This remains the case.

"People that have client clearing project experience are definitely in high demand," says Sally Martin, associate director at recruitment firm Robert Walters. "This is to introduce greater transparency into the derivatives market and reduce risk".

However, as Citigroup's push demonstrates, there's also demand for important front office staff who can lead the exchange traded derivatives push.

"This is a very current focus at senior levels in banks and the future relies on US legislation," says Russell Clarke at FigTree Search. "There's a need to onboard large clients and secure their commitment to the bank's transaction and exchange services.

"You need marketers who really understand the clearing and trading platforms, as well senior relationship management skills to bring the big cross product clients on board. There's also a need for traders who are familiar with liquidity management across exchanges," he adds.

Barton says the real need is for people who know about exchange traded derivatives and OTC products. "There are not many people who are bilingual across both product areas," he suggests.

This article first appeared on our UK site