Trading Operations and Infrastructure Market Update – (Q4 2022 / Q1 2023)
The Operations & Infrastructure Recruitment Market has seen significant double-digit growth in vacancies and hiring throughout 2022.
Key Drivers in 2022 –
Market volatility and thriving market trading conditions –
A significant increase in trading activity has been attributed to direct increase in hiring for Operations Analysts, Associates and Specialists. Driven by firms thriving on market volatility across multi-asset products lines, including Equities (including Futures, Options, ETFs), Fixed Income (Bonds) and Derivatives, predominately OTC Rates and Credit.
OTC Interest Rate Derivatives
• Global interest rate volatility has fuelled increased trading activity.• Demand for candidates with detailed knowledge of complex structured OTC rates has seen significant demand pull pressure in the recruitment market. The ability to differentiate candidates on their respective coverage of
OTC products, e.g., Flow VS Structured/Exotics Rates has been key. Ensuring candidates can explain the pay offs and key life cycle events, namely predefined schedules for exercise dates will continue to be in demand for H1 2023.
OTC Equity Derivatives
• Options, Futures and Swap trading, has also driven the appetite to hire Op Specialists.
• Requirements for Ops Specialists with detailed knowledge of OTC Equity trading, with the ability to cover trade capture and life cycle management with particular focus on Corporate Actions and exercising options.
New Product / Business Lines –
Physical Commodities Trading
• Firms returning to Physical Commodities Trading Operations. Openly taking advantage of the Physical Commodities global market boom.
• Plenty of funds have hired new traders across Energy Trading (covering Oil, Gas, Power, and Emissions) and Metals (Base & Precious Metals) and other physical commodities.
• Increasing requirements to support physical commodity operations, account for physical deliveries, warrants and logistics. Coupled with building out operational controls and framework to accommodate new trading activities.
• Along with market hedging and transferring back to “safe haven” assets like Gold, and other Precious Metals, will result in demand for physical commodities specialists.
Digital Assets – Cryptocurrencies
• Digital Assets – Cryptocurrency Trading, driven by significant appetite in H1 2022.
• The appetite for investors to derive greater returns has fuelled the rise of Crypto Operations investment lines.
We have seen plenty of skilled Operations Specialists and Managers, who have moved in Crypto currency firms at the start of 2022.
• Current market sentiment albeit uncertain, we still envisage this to be a growing market for would be investors and funds seeking greater returns in comparison to other assets.
Career Progression –
• Coupled with front end markets and volumes rebounding this year, it is worth noting the number of Operations Analyst / Associates moving organically within the business, which have attributed to increased replacement hires.
• We have seen a number of Ops Analysts/Associates securing moves into Front Office Trading, Treasury Management, and Front Office Technology.
• Firms offering internal mobility offer a positive reference to passive talent in the market.
Other Key Issues – Hybrid / Remote Working Model –
• Contrasting approaches from clients with respect to Hybrid Working Model.
• We have seen a number of funds adopt hybrid working model, to support retention and offer great flexibility.
• A mix of models have been adopted, with 4:1 to 3:2 models. For example, 3 days in the office, (Tue, Wed, Thu), and 2 days WFH (Mon & Fri) for the whole fund, proving popular.
• Many Systematic, Quant, Algo funds have been back 5 days in the office since May 2021. Some firms with 4:1 model is pushing to move back to 5 days in the office.
• Firms offering hybrid working model are seen more favourably by candidates, but this is offset by the acceptance and nature of working for a profitable fund.
• Being present, collaborating directly with the business and supporting the generation of alpha, and sharing the rewards, through higher variable compensation is also a driver. Being able to engage with business directly, understand underlying strategy and learn from more experienced peers for junior analysts is a key driver for junior candidates.
Current Market Compensation for Operations 2022 –
*Current market base salaries excluding benefits and bonuses* This information is based on several multi-strat funds that we have been working with for Operations hires this year to date.
• Operations Analyst – (1 year -3 years’ experience) – £35k to £45k
• Operations Associate – (3 Years – 5 years’ experience) – £45k to £55k
• Operations Specialist – (5 Years – 8 years’ experience) – £55k to £65k
* The above is based on Ops profiles with experience across Fixed Income, Equities and FX Derivatives, and those looking to move looking for an uplift on current base salaries.
• Candidates with 5 years plus experience, with specific experience covering OTC Derivatives – Rates/ Credit (including Structured / Exotics), Equity Derivatives (Swaps, Options, Futures), are highly sought after in the current market, we have several open requirements for Derivative Ops Specialists.
• Operations Specialists are openly looking for £70k to £80k base salary to make the move in the market, based on covering current compensation (fixed & variable), technical derivatives knowledge and direct experience supporting OMS/PMS implementations and other initiatives to drive efficiencies and deliver cost savings.
• High Costs of Living and high UK rate of inflation have attributed to cost push wage pressures.
• Candidates have openly moved to offset perceived lack of salary growth in nominal terms (max 5% to 8%), compared to 15% to 20% uplift in base salary through moving roles.
• Buy backs – firms have resulted to adopting aggressive buy backs to secure talent, though most counters have been rejected. Due to perceived lack of initial salary review, career progression and opportunity to diversify asset class coverage and work directly for a fund in comparison to IB, Institutional Asset Manager or 3rd Party Vendor.
2023 Operations Outlook –
• 2023 will see firms adopt an initial cautious approach. Positive returns derived in 2022, will drive hiring activity as funds rationalise business lines that will generate greater returns.
• Subsequent hiring requirements to service more profitable business lines and increase trading activity will be the order of the day.
• Coupled with the need for drive better risk management, leveraging Advanced Excel VBA and Python Programming skills to support data management, pricing, and valuations. Driving efficiency enhancements through automation, process re-engineering, STP Projects and Order Management Systems (OMS)/(PMS) implementation/integration.
• Appetite to leverage physical commodities markets will see candidates look to move into physical commodities operations. Those with prior physical commodities experience will secure considerable uplift (20% to 25%) in compensation packages to move.
• Geopolitical uncertain and diminishing confidence in digital assets that have been heavily driven by speculation will see a movement of Ops talent back to stable product lines.
• Current stuttering global economic outlook, and recent high-profile firms like FTX filing for bankruptcy will reduce confidence in the short term, but we envisage firms with greater appetite for increased returns, to remain invested within digital assets.
The Operations Infrastructure desk at Black Swan Group has over 24 years’ combined experience in the London Financial Services market. (Asset Management / Hedge Funds).
• We pride ourselves on our evolving network, technical approach and understanding. Our ability to differentiate high performing passive talent and work in partnership to be successful.
• We allocate the best solutions for our client’s bespoke requirements. We take the time to understand the prerequisites, leverage our trusted advisor status, equitable candidate, and client relationships to offer the best service and results.
✓ For candidates and clients, it is all about going the extra mile. Explaining actual opportunities, the subsequent opportunity to diversify asset class coverage, and interaction with key business contacts.
✓ Whether it be preparing our candidates for technical assessment, presenting transferable technical & softer skills to add value from day one; we are dedicated to making a difference and charitable with our time.
✓ Please do contact Raj Dhanapala & Harry Valentine to connect and build a value-add relationship.
✓ We’re here to support any client requirements for market information, competitor analysis, bespoke retained hiring solutions, salary / compensation benchmarking across Trading Operations.
