When you're choosing where to work, should you really go for the sorts of big name, big brand banks which look good on your CV and ensure you'll command a pay premium for the rest of your career? Or should you go for the sorts of smaller firms which offer you 'exposure'? Steven Griffiths, director of Absolute Derivatives, and a former structurer and electronic products trader at Citi, Commerzbank, and Mitsubishi UFJ, argues in favour of the latter. Not only that, but he says it will help your finance career to move around regularly.
We asked Steven some questions about these and other issues. This is what he told us.
So, you've had a pretty interesting finance career, working with electronic platforms, 'fixed income solutions', XVA trading, and OTC rates derivatives - all areas of innovation in the banking industry. How did you manage to stay at the front of the curve?
"I've always looked to see where the market is moving and to stay one step ahead.
At Citi, I started out working on interbank rates derivatives in 2004 and it was pretty old fashioned. I still had a dealer board and I'd shout down the line and people would shout back to me, but it was pretty obvious that it wasn't an efficient way of trading. I helped build the electronic platform and we tried to move the market forward using IB Chat, which meant we could look at screens and speak to our traders. Over time, however, I found the inter bank rates role was changing at Citi - volumes were falling and it was becoming much more about using trades to manage the bank's balance sheet, so I decided to move on..."
You went to Commerzbank. Was that a deliberate move?
"Yes. I joined Commerzbank after nearly four years at Citi and I learned absolutely loads there. Although Commerzbank is a huge German bank, it doesn't have a big rates trading franchise. I became one of the bank's lead rates derivatives salespeople and managed to cement my expertise in XVA trading and balance sheet management. I'd come from Citi, which was around five years ahead of the rest of the market in terms of innovation. Commerzbank was way behind and it gave me an opportunity to carve my niche. When I arrived at Commerzbank in December 2009, they didn't even have an FVA or CVA desk. I was able to help set them establish one and to specialise in balance sheet management before it became fashionable.
After another four and a half years at Commerzbank, you moved to Mitsubishi UFJ as a director, but you only stayed there for 10 months. Why?
"Sometimes it's difficult for banks to move at the speed that regulation is changing. You get internal speed bumps when management has one view and employees have another. The head of fixed income might say that he wants to promote electronic trading, but that's not necessarily in the interest of actual swaps traders. You get traders who won't go along with it, who'll refuse to put the best prices on the screens. That can become frustrating. I figured that I can best use my expertise as an adviser rather than as someone embedded in-house."
So, now you've set up Absolute Derivatives to help banks with their over-the-counter (OTC) derivatives and clearing businesses? Are you a consultant?
"I don't like to think of myself as a consultant. The word 'consultant' suggests you're not adding value. My aim is to help my clients to increase their OTC derivatives trading volumes and to make money. I know how to build a client base and to help banks achieve targets within today's regulatory constraints, whilst making the sorts of transparent value adjustments that are necessary under XVA valuation framework. I see myself more as someone who can help build a client base and establish a strategy before handing everything over to be run internally."
What advice would you offer to other people who want to work at the forefront of regulatory change in finance?
"I've worked for a range of different firms and generally spent a few years at each. This has really helped to give me a perspective on what's going on in the market. It's helped too that I've worked for a lot of different related departments within those firms - too many people just stay in their one area.
If you want to work in a business area that's affected regulation, I'd therefore advise you to move around enough to get a broad perspective on how changes are impacting the whole division. It can help too to work for smaller banks after spending some time at larger ones - you can often have far more impact at smaller firms which aren't always aware of new initiatives in the market. Some big firms, for example, are so careful about pricing that they will run a full two hour simulation before pricing something, whereas a smaller bank might just press F9 and pull a price from a spreadsheet.They're just not as aware of the need for transparency and how much effort goes into it.
Lastly, I'd say that if you want to work in regulation you need to genuinely follow regulation and to know exactly how it will be relevant to the front office. How will it affect trades, pricing and market share? It's surprising how many people can't actually be bothered to read and reflect upon a two page document."