A panel of recruiters gives its assessment of typical London pay packages. Base: 110,000-125,000; bonus 500%-600%.
Plus ca change...er, plus ca change. In early 2004, when financial markets started coming back to life, derivatives were all the rage with financial institutions falling over themselves to cut a share of this apparently boundless money-spinner. A year or so later, this situation looks a lot more complex; as credit spreads tighten, the focus has shifted towards high margin business.
Mike Stubbs-Egginton Napier Scott's head of structured products, says, 'Traders are showing concern at being able to maintain or grow P&Ls, and are delighted when high margin business hits their books, whilst marketing teams are having to show high value-added ideas to their clients to differentiate themselves, win the business and increase the chance of cross selling. In the middle sits the structurer.'
And what a place it is to sit. With everybody expecting wonders from him or her, a good derivatives structurer who knows the business and has a good track record of structuring, pricing and placement can command packages that make other city professionals' eyes water.
So who's hiring? ABN Amro, Bank of America, Dresdner, HSBC and BNP Paribas are reportedly all looking to beef up their teams. And what are they paying, you ask? Scads.
Stubbs-Egginton says a typical basic is around 100,000-120,000 but after a good year the bonus could be as much as 700,000. Richard Fraser of RJF Global Search concurs, suggesting a typical bulge-bracket basic of anywhere between 95,000 and 140,000 with a bonus of maybe 500%. He adds that bonuses this year are around 10%-30% up on last year.
Where exactly is the biggest money? Fraser argues that the more you know the better: individuals who have a catholic background - those who have worked with variously in FX, interest rate, commodity and credit derivatives - are clearly more saleable than those with expertise in just one area.
Typically, derivatives structurers working within a bulge-bracket institution understand things that would have the rest of us running for the exits: advanced techniques on implied diffusion model and the stochastic volatility model, to name just two. They would also have the standard required abilities of good communication skills - being able to liaise with marketers and traders, explain products to clients and hold internal product workshops for the sales team.
However it is those with a background in synthetic CDOs and with cross-asset class experience and who are able to make it in the fast evolving world of derivative hybrids that are placed to bring in the really big moolah. 'The complexity of these product ranges means that those with the scarce client-facing skills combined with strong technical abilities are in the greatest demand,' says Stubbs-Egginton.
Comments and figures by Napier Scott and RJF Global Search