Although many buy- and sell-side firms are cutting jobs, there is still steady demand for electronic trading expertise, according to Marcus Newman, director and specialist in the electronic, algorithmic and program trading markets at recruitment firm Riversdale Consulting.
“Despite existing market conditions, the electronic trading recruitment market continues to be buoyant,” he says. “I believe the electronic trading space will continue to require significant talent in 2009.”
Newman says that part of the reason for the continued demand is the recent raft of investment bank mergers and acquisitions. Banks acquiring rivals with large electronic trading operations do not always have sufficient staff to service the order flow from their new purchases because staff from the acquired bank may have left in the period of uncertainty running up to the merger. There could also be a requirement for technical staff as the trading systems of the merging firms are integrated.
In addition, smaller brokers are looking to either establish electronic trading operations or beef up existing ones to round out their service offerings and compete more effectively with their bigger rivals.
DMA/algorithmic sales traders are particularly in demand among tier-one brokers as they try to retain clients, according to Newman. “These traders offer market colour, execution and algo consultancy, and in most cases execution capability,” he says. “These skills, combined with good algorithmic knowledge and the subsequent client relationships they develop over time, have made them an increasingly important commodity.”
Newman also expects an increase in demand for staff with experience in smart order routing, the multilateral trading facility/dark pool market and transaction cost analysis, as well as those with electronic trading expertise in asset classes other than equities – particularly derivatives. However, he expects a decline in demand for risk program trading expertise as the requirement for DMA/algo talent grows. “There will also be further redundancies as the two areas inevitably become more closely aligned,” he adds.
Smaller brokers in particular are likely to benefit as some of their larger rivals continue to shed staff. “A lot of the smaller sell-side firms will take advantage of experienced candidates coming onto the market that they would not necessarily have had access to in the past,” says Newman. He adds that the lay-offs from larger firms will result from “redundancy, migration of clients due to counterparty risk changes, disintermediation of prime services and decreased bonuses.”
The fall-out from the larger firms could also present opportunities for asset managers looking to add sell-side electronic trading expertise to their trading desks. However, while Newman is beginning to see a shift from sell- to buy-side, he says it is not as pronounced as some might expect. “In terms of technology, much of the buy-side is behind the sell-side and it is difficult to play catch-up,” he says. “If you hire a big-ticket electronic trading executive from the sell-side, you need a big-ticket budget to match. It’s not just about hiring the person – you need the technology, infrastructure, human resources and support that allow him to do his job.”
Nevertheless, Newman says some larger buy-side firms have poached big sell-side names to run their centralised dealing desks. “The buy-side is being more proactive in developing its own execution capabilities while maintaining broker relationships,” he says. “The trading environment is changing shape and I envisage others catching up and following suit. Watch this space.”