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The FX Jobs Market: A Game of Musical Chairs

As the FX jobs market becomes ever more competitive, Galen Stops talks to recruiters about the skill sets that firms will be looking for in 2017

As the FX industry continues to evolve, so too does the skill
set that employers require and the roles that are
available.
For example, once upon a time it would have seemed
inconceivable that vendors and ECNs would need liquidity
managers. Now many of them employ people in a role similar
to that of an e-trader, but instead of taking risk their job is to
examine the liquidity available and help guarantee the
efficiency of trading for clients and optimise P&L for their own
company.

In terms of the changing requirements that FX trading firms
are demanding, it will surprise few people to hear that two key
trends that are emerging is that they want more compliance
staff and that they expect employees to be more tech savvy
than ever before.

Asked what positions FX firms are looking to fill at the
moment, Mike Goggin of Brookleigh Recruitment, says simply:
“There’s far less trading roles and there’s less sales roles, the
more vanilla the job is, the more demand is drying up. In
contrast, demand for surveillance and compliance experts
continues to grow.”

On the buy side, Charlie Stenger, a director at Sheffield
Haworth, sees more asset managers and hedge funds
competing with the prop trading firms for staff with quantitative
trading and analysis skills.
“That’s where the big battle is going on right now,” he says.
“We’re seeing a lot of quants going to the big hedge funds.
Previously, prop shops led the charge of quant recruiting, but
now we see the big Greenwich-based hedge funds and asset
managers are all getting into that side of the business.”

In addition, Stenger says that for sales roles, an
understanding of the technology underpinning the trading
systems being used is increasingly more important than simply
having a good list of contacts and industry relationships.
“Sometimes firms will pay for a killer Rolodex, even if the
person doesn’t have deep technical expertise. But recently, we
have seen exchanges and fintechs prioritise technical sales
skills over a strong network. Many exchanges already know
who their business targets are, they just need to communicate
efficiently with both the traders and programmers,” he says.

Hybrid Roles

Likewise, Charlotte Battisti, a founding partner at MCL
Search in London, says that in some instances, the automation
of the FX market has eroded the importance of relationships.

“The majority of the FX sales people will claim that
relationships are as important as ever, but that is only partially
true. I would say that the automation of the market has gotten
to the point where what matters most is pricing,” she says.

One of the big trends that Battisti sees in the e-FX market at
the moment is banks increasingly looking for candidates that
can combine the sales and trading role. Part of the reason for
this, she says, is because the traditional sales skills are less of
a focus now.

“The reason why this e-sales/trader role has become hybrid
is that there’s no need for the old-school sales relationship that
existed before. Now the relationship is more data driven, it’s
about trying to understand what the counterparty needs in
terms of pricing and other services,” comments Battisti. This e-sales/trader role also speaks to the trend of needing
to be more technologically literate in order to compete for the
top jobs in FX.

“An e-sales/trader needs to have strong technical or data
skills,” says Battisti. “They don’t necessarily need to be a
quant, but they need to be very good at computer science and
can tweak an algo or explain to a quant how a strategy can
maximise the P&L/revenues. But at the same time they need
to be able to talk to the ECNs and help grow the franchise, as
well as speaking to the clients in order to optimise the flow.These are the people who are really hot in the market.”

Brett Evans, director of sales, financial services North
America, at Bay Street Staffing, also reports that the banks
there are trying to get staff that can function in more than one
role within the firm.

“In Canada, the banks forced a lot of their brokers to get
their insurance licenses on top of equities and they do FX as
well. The banks are eroding away at every aspect of money
going out, cut a buck here, trim a bit there,” he says.

As part of this drive to cut costs, Evans says that there has
been a lot of “juniorisation” of the bank FX desks.
“Right now they’re just hiring more juniors and trying to push
everyone online,” he claims.

Human Element

Battisti says this is also a trend that she’s witnessing,
although she adds that she does not agree with the strategy.
“You need someone with expertise and experience if you still
care about franchise growth and expansion, you need someonewho can hold their ground with some of the ECNs, the brokers
and the clients, and that mainly comes with experience,” she
says.

The big concern that Evans has regarding this juniorisation is
that in some cases he says that the banks lack the expertise to
accurately price and trade more complex FX products.

“If a client should be putting on a complex options strategy
the junior staff won’t have suggested it as a possibility to them,
nor will they understand the strategy. There’s no way for the
client to keep the pricing true, there’s no checks and balances.
The banks can take advantage of them. The sad part is that this is proliferating all the way down,
right at the time now when, because of the volatility in the
market, clients need help and need someone who can explain
different options strategies to them.

“The banks have been pushing everything onto online
platforms, which works well for your nuisance payments. But
when firms are taking major decisions, or putting on really big
positions, or writing their FX policies, they want to talk to a
human being who can walk them through that process,” he
says.

However, Stenger disagrees that banks have been juniorising
their FX desks, instead arguing that the development of
technology and increased automation of the FX industry simply
eliminated a whole slew of traditional FX jobs.

“Back in the day on the trading floor there might have been a
guy that stood there and checked risk all day, and got paid
pretty well for providing that function. Now, that risk gets
checked by the millisecond and sent upstairs, they don’t need
that guy making sure that the risk has been entered correctly,
so he’s gone. Many of those positions have been eliminated
and replaced with technology. Yes, they might put a junior
person with technical skills on the desk to monitor the systems,
providing a first line of defense in case of an emergency,” he
says.

Stenger also makes the case that there are still people
within the banks who understand how to take and manage
risk, it’s just that post-Volcker Rule a lot of them were repurposed
within these institutions. One example of this that he
cites is a former equities prop trader that now prices risk on a
collateralised basis for the bank, similar to the FXPB function.
They run a P&L and price risk but it’s not considered a profit
centre.

“Prop trading doesn’t exist in the way it used to, it exists in
more of a risk management facility,” he explains.

Talent Exodus?

To the casual observer of the FX jobs market, there seems to
have been something of an exodus of talent from the banks in
recent years. This talent seems to be moving in all directions,
to trading platforms, to non-bank market makers, to buy side
firms, to vendors and
sometimes simply striking
out on their own.

One thing that seems to
be clear heading into 2017
is that, in general, banks
have become fundamentally
less attractive places to
work.
Evans says that some of
the sheen has come off
bank roles because of the
massive bureaucracy
involved and some
candidates can get
frustrated because there’s more rungs that they have to climb
– they can’t necessarily jet to the top of the pack based on
ability the way that they perhaps could at, say, a buy side
trading firm.

Stenger notes that there will always be huge demand for
roles at the big banks, yet within many of those banks there
are individuals at the director and managing director level that
are frustrated by the bureaucracy and noticing that the big pay
days they used to expect are now smaller and more infrequent.

Battisti also says that many bankers are frustrated by the
way their institution operates the business, stating that new
risk and compliance rules often mean that they are unable to
onboard clients they know would generate more revenues. “There’s a lot of regulation and a lot of politics and the
candidates are often frustrated with it,” she says.

And yet, anxiety about job security is high, meaning that
some of the top talent in the FX industry within the banks can
be extremely reluctant to leave.

For some, it’s simply not clear where they’d go. With many
banks analysing their own FXPB business, growing a client
roster through salesperson acquisition is not a priority.
Therefore, Stenger says that if someone is considering moving
their book, they need to determine which accounts are the
most valuable and who finds those clients appealing.

“Electronic business is increasingly more and more
challenging to transport to a new venue or bank. Once a client
is actively engrained onto an electronic platform, the
relationship manager unfortunately becomes less relevant.” he
says.

Battisti says that job security is a key concern for some
candidates, especially given some of the recent short-termism
that has seen banks hire staff only to soon after announce
cuts that involve eliminating the same positions. That is why
she says many candidates that have been at a bank long
enough to secure a redundancy package would rather hang on
than look for something else.

With the biggest demand being for highly technically skilled
candidates, or ones that are able to fulfill multiple roles, these
recruiters claim that matching employers up with the staff they
need has become increasingly difficult in FX.

To compound this, Goggin notes that in the current market
environment “employers don’t want to lose their top
performers and the resignation process has never been
harder”.
For some employees of FX-focused firms, the industry could
seem increasingly like a game of musical chairs as the
opportunities available to them continue to shrink. Meanwhile,
Battisti warns that the employers themselves are often
“looking for unicorns” in their desire to find talent that can
excel in multiple different roles simultaneously.

For both of
these groups, 2016 was a difficult year in the FX jobs market. It
doesn’t sound like 2017 will be any easier.

Galen Stops

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