The equity derivatives technology arms race

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An equity derivatives technology platform is the new must-have among investment banks in the UK, with a good number of firms ploughing money into this area. With only a limited supply of IT expertise available, something of a war for talent is developing and (shock, horror) banks are even offering pay increases.

We understand that while most banks are keen to hire techies in this area, the most active recruiters currently are Barclays Capital, Credit Suisse, Morgan Stanley, Nomura and even UBS.

Sentiment around equity derivatives turned positive in the first half of this year, and recent research from Greenwich Associates suggests firms are continuing to increase their use of the asset class. This is filtering down towards technology investment.

"At the beginning of the year, everybody was looking to build an FX platform, and now the focus has switched to equity derivatives," says James Richmond, sales director at IT in finance recruiters Cititec. "The problem is, with all the firms building at the same time there's a battle for expertise."

Base salaries for equity derivative techies have risen between 15-20% over the last three months, say recruiters, in an attempt to lure a comparatively limited talent pool away from their current employer.

"Equity derivatives is where we're witnessing the most demand for technology staff at present," adds Brent Harris, head of UK permanent recruitment at Aston Carter. "Candidates who can combine two-three years equity derivatives experience with deep understanding of C# technology can command a premium."

Permanent development roles can pay anywhere between 50-90k, while project management and business analyst positions offer 80-100k. On the contract side, it's possible to earn 800 a day as a project manager, says Paul Elworthy, associate director in the IT and banking finance division of recruitment firm Hudson.

The caveat to all the above is that banks are unwilling to consider those without sufficient exposure to the asset class - even cash equities experience isn't particularly valued.

"Invariably, banks will not compromise when it comes to taking on candidates without specific experience of equity derivatives," says Elworthy. "But those who tick all the right boxes can in some cases expect a pay increase of around 15%."

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