Compliance H1 Market Update

Market trends

• Compliance recruitment has been resilient to the recent impact of COVID-19. In general our contacts have seen an increase in their workload, increased volatility, structural and logistical concerns, and the potential for increased regulatory risk (eg short selling ban).
• Many firms have implemented short term hiring freezes (often as a by-product of assuring staff there will be no redundancies during this period), with August/September the time frame most often mentioned where it is known.
• Mid-sized banks and firms on the buyside are more likely to be continuing to hire and broader roles in these
• In February and March a large number of contractors were either given notice or transferred to PAYE terms in anticipation of changes to IR35 rules. While this has since been delayed for a year there are a lot of contractors currently available/keen to secure new roles.
• Consolidation of asset classes, reduction in equity and commodities exposure in banking. Focus on electronic trading.
• First line controls has been an evolving discipline since the financial crisis with candidates coming from a variety of backgrounds including Compliance.. Initially sales and trading focused first line risk and control now reaches across other areas (operations, technology, etc) and product lines (Investment Banking, Asset Management etc). The interaction with Compliance has generated roles in both first and second lines.
• Ongoing Brexit relocation Barclays to Glasgow, cuts at HSBC, cuts expected at Credit suisse
• Dublin – Market has continued to develop and grow, albeit slowed by Covid-19. The major growth area has been for the buy-side with the number of MiFID firms there growing exponentially since the Brexit vote. There have been a growing number of banks choosing Dublin as their EU headquarters though, with the likes of Barclays, Bank of America, Citi and Wells Fargo all choosing the Irish capital as their EU hub. All firms have their senior teams in place now, with future hiring plans depending on what form of Brexit arrangement is laid out in the coming months, however, all would expect to grow to some extent when the UK leaves the EU.
• Paris – Has seen a steady growth in a number of areas, predominantly driven by the banking market. Many of the French banks have relocated global functions back to Paris, where some previously had these sitting in London. This has led to some senior hires across the market, often able to lure people from the international banks with the exposure to a role of global nature. Natixis appointed a new global head of CIB compliance last year and they continue to build out the function locally and globally. Some banks, such as Bank of America have chosen Paris as their global markets hub post Brexit so many of the banking hires have been product advisory in nature to support the build out of these business areas. JP Morgan set to start a build out there in the coming months which has been delayed by Covid.
• Germany – Slower growth here as is typical with the German market place but a number of firms have chosen Frankfurt as their future EU hub, most of those being the banking hubs which has led to this being a very candidate short area of the market. Firms have found it more difficult to hire here with navigating the German labour laws if not something they have had to do previously proving to be a challenge. Expectation that a number of firms could grow their German functions considerably once there is a clear outlook on the Brexit scenario.

Senior moves

• Andrew Sowter – MD HSBC from Deutsche where he was deputy head of Global Compliance
• Jerome Chambellant – Chief Compliance Officer / MLRO at CIBC Luxembourg from Duff & Phelps
• Claire Foster – Head of Regulation and Compliance at London Stock Exchange from Deutsche Bank
• Lisa Walker  – Head of Compliance UK and Middle East at ING from IPSX
• Nikhil Rathi – Chief Executive of the FCA from London Stock Exchange
• Therese Santos Chief Compliance officer at Hudson River Trading from Instinet

Diversity

• We continue to see more active engagement from clients, encouraging balance and reporting around candidate shortlists. In some key areas of Compliance (e.g. Surveillance) we have seen firms very clear on their efforts to address historical imbalances
• Flexible working is one area under discussion given the widespread use of remote working during lockdown, while employees have enjoyed the lack of commute and more personal time, many feel they are working longer hours and more tied to their desks.  The premise of home working has been enjoyed and viewed to be beneficial to all parties but the paranoia now exists over whether the appropriate controls are in place to allow this to continue longer term

Salary spikes

• Increased competition in the short term for most Compliance roles relieves some of the upward pressure on salaries with more candidates (many immediately available) chasing fewer roles (IR35s impact on contractors, Lockdown, and ongoing Brexit relocation)
• Fixed Income and Electronic advisory continue to be in high demand particularly at the VP level, however reduction in equities and commodities roles as firms exit those product lines means there are some alternative options if there is flexibility around product exposure
• Libor/benchmark SMEs are in high demand due to Libor transition as we approach the end of 2021 deadline
• Candidates with broader ‘generalist’ skillset both at mid-tier banks and buyside.
• AML particularly in relation to transaction monitoring and sanction screening.

Country, Risk or banking industry news

• The FCA released a marketwatch in May highlighting their expectations of market conduct during lockdown encouraging a focus on reporting and controls during this period. We have spoken to a number of clients experiencing increased regulatory scrutiny during this period and the expectation is that this will continue while the majority are working remotely.
• Last week Turkey banned Goldman Sachs, JPMorgan, Merrill Lynch, Barclays, Credit Suisse and Wood and Co from short selling for up to three months. These bans were reportedly due to disclosure failings and highlight the pressure on Compliance disclosure and reporting.
• Last week Bloomberg reported that suspicious transaction reports (STORs) were at their lowest level since current regulation took effect in 2016, with 215 in April https://www.bloombergquint.com/business/suspicious-u-k-trading-alerts-plunge-as-dealers-work-from-home.
• HSBC are to make 35,000 job cuts https://www.bbc.co.uk/news/business-53075530
• Credit Suisse are believed to be planning job cuts in their investment banking division https://www.marketwatch.com/story/credit-suisse-mulling-job-cuts-to-hit-profit-targets-report-2020-07-13