Attempts to clear backlogs in the credit derivatives market are creating a hiring boom for technology staff.
Recruiters say banks' pledge to automate credit derivatives trades is driving up demand for business analysts, project managers and programmers familiar with credit derivative products.
"There's been a massive increase in demand for people with credit derivatives product knowledge," says Richard Lett, a manager at recruitment firm Jonathan Wren, "Banks are still hiring now, despite the fact that it means buying out bonuses."
Demand for credit derivatives technologists is likely to increase. Prompted by the concerns of the UK and US financial services regulators, leading banks recently told the US Federal Reserve they would automate future credit derivatives trades and operational processes and clear existing backlogs by June.
There's plenty of work to do: the credit derivatives market has grown more rapidly than trading systems have been able to accommodate it. A recent study by the International Swaps and Derivatives Association (ISDA) found just 40% of confirmations in the credit derivatives market are automatically generated. Credit derivatives trades are more complex to clear than traditional vanilla trades because payments can be spread over time, there are often several counterparties, and trades need to be confirmed and then signed off by legal departments.
Robert Lycett, team leader on the banking and finance team at recruitment firm Elan, says hiring is currently highest for business analysts and project managers who can prepare the ground for new credit derivatives technologies. "Programmers will be needed in the next wave of banks' hiring," he says.
Third party providers of credit derivatives technology are also looking for staff. Calypso Technology, a San Francisco-based provider of derivatives trading and processing systems, has grown its London team from 10 to 25 people over the past year with hires from the likes of JPMorgan, Dresdner and Rabobank. Last month MarketAxess, which recently launched the first client-to-multi dealer electronic credit default swap index trading system in London and New York, hired Andy Brindle, former global head of credit derivatives at JP Morgan.
In a finite market, demand for technologists with credit derivatives expertise is already pushing up prices. Lett says credit derivatives specialists command salaries more than 25% higher than experts in less dynamic product areas: a programmer with two to three years' experience can expect a salary of 65,000 to 70,000, plus a bonus.
Lycett says programmers with five years' derivatives experience are on base salaries up to 85,000. Similarly experienced project managers can expect a maximum base of 100,000, he says.