Can you still find work easily on a CVA desk if you lose your job in structured credit?

eFC logo
Not a CVA desk

No. Last year, counterparty valuation adjustment (CVA) was very hot: there was lots of hiring. This year, CVA trading desks are mostly full. There are opportunities, but not for traders.

“The recruitment of CVA traders probably peaked in 2010,” says Peter Church, head of trading at search firm Global Quant Recruitment (GQR). “Basel III will ensure there’s still some CVA hiring going on, but it’s nowhere near as bullish as people think it is.”

CVA desks are an internal function which aggregates counterparty risks across the bank. Having centralised these risks, they hedge against it, typically through the purchase of related CDSs.

“A lot of the structured credit traders who lost their jobs in 2009 moved into CVA trading,” says Church. “The skillset is similar and many of these roles were filled internally using people who would otherwise have been made redundant.”

Recruiters say that people who’ve lost their jobs recently in credit and rates are hoping to make a similar move. “People who’ve been let go are probably thinking they can move into CVA too,” says Christian Robbins at Nicholas Scott Executive Search. “Unfortunately, CVA has matured somewhat and is not expanding as it once was.”

If you are moving into CVA, recruiters in the area advice seeking a bank which treats its CVA desk as a profit centre, rather than as a pure hedging business. P&L-focused CVA desks should pay the most. BAML, BarCap, Nomura and – surprisingly – RBS are all mooted.

Although demand for CVA traders is slowing, hiring for other areas of CVA desks remains strong. Julian Harris at recruitment firm Riversdale Consulting says there’s still growth in areas including quantitative risk and model validation.

“The thing to note is that there isn’t yet an industry standard organizational structure for counterparty exposure management (CEM) or CVA,” says Harris. “Even tier 1 banks will need to recruit specialist skills as they reorganize.”

Meanwhile, if you’re a structured credit or rates trader who’d hoped to find a new and lucrative job on a CVA desk, but can’t, Church insists there is still hiring going on in certain alternative product niches. One of these apparently involves credit linked notes (CLNs) and bond re-packs. “It’s all about hiring in these niche areas now,” he says.