The foreign exchange jobs market in 2013 was characterised by a lower volume of hires by banks compared to the previous three years, according to several recruiters that Profit & Loss has spoken to, with many expecting more of the same in the FX trading and sales space this year.
Simon Head, co-head of our Global Financial Markets practice, says “The volume of hires in 2013 was lower than in 2012. Banks have been generating less income in FICC and the reduction in hires can be seen as a general reflection of the economy per se. This could also be seen in the equities, fixed income and commodities jobs markets; FX was no different.”
Head bases this conclusion on FX hiring data that he has been collecting from 2010 through 2013. “For the moves in 2013 we used a sample of 132 data points. Normally we use around 200 to 220 data points in an average year and 350 data points in a high volume hiring year. That doesn’t mean there have been 132 moves but it means the samples of moves we have is lower, indicating that the volume of hires has been lower overall.”
Head estimates that sales positions accounted for 64% of total FX hires last year. According to his data, which breaks down sales appointments by client category, hiring for FX institutional sales roles continued to be the busiest and accounted for 27% of the total FX sales positions in 2013, 1%higher than the previous year. Corporate sales hires fell from22% in 2012 to 14% in 2013, while appointments in hedge fund sales were flat year on year. Hiring for FX banks sales dropped from 10% in 2012 to 7% in 2013 but on the upside there was growth in the percentage of e-FX sales hires, from4% in 2011 and 13% in 2012 to 18% in 2013.
There were several discernible trends in the job market last year. According to Head, 2013 was characterised by a move towards a demand for more vanilla products, similar to 2009. He says there was a higher number of FX traders hired last year– before the FX fix scandal erupted – than the year previously, but there was a reduction in the percentage of structurers and strategists recruited, reflecting a focus towards flow FX.
A number of banks have had to make key hires to replace sales staff and traders lost to the buy side as funds continue to grow their global macro and FX volume businesses, one recruiter observes.
Banks will likely lose some staff to brokerage firms this year, agency brokers in particular, says Head. “More brokers are being set up and given the right set up, it is possible to retain hedge fund clients and earn more compensation,” he says. “Not in terms of salary but the percentage pay-out will be higher.”
As banks move away from a siloed FX platform to offering clients a multi-asset e-commerce product that incorporates rates and credit, there will be a greater demand for hybrid sales people, recruiters predict. Examples of recent appointments, where people have had their remit expanded across asset classes, include Chris Bae, now global head of fixed income, currencies and commodities (FICC) electronic trading at Bank of America Merrill Lynch; Chris Purves, global head of FX e-trading at UBS, who assumed greater responsibility following the merger of the bank’s FX business with rates and credit late last year; and David Tait at Credit Suisse, now head of the global macro products group, a combination of the bank’s FX, rates and commodities businesses. One London-based recruiter says, “Hybrid sales people are often a requirement, but they are few and far between.”
Hiring last year also focused on the replacement and upgrading of teams rather than expanding them as banks wrestled with cost pressures and succumbed to pressure to keep staff numbers lean. “Banks will most probably stay head count neutral, but gradually increase the quality of the team by natural attrition. Generally the major banks may lose the two lowest performers in a team, but over time will hire two or three vice presidents to replace them. Banks tend to be making strategic and opportunistic hires now,” says Head.
Will things pick up this year? There seems to be a divide in opinion. “The problem last year was that there were redundancy programmes so hiring was badly affected at the end of 2012 and at the beginning of 2013. Some banks had a pretty good first half of the year, but a difficult third quarter and if the third quarter is difficult in any year then they’re not going to take too much risk in the fourth quarter. This year there seems to be some increased activity again across all client groups,” says the London-based recruiter.
The London-based consultant says, “There was cautious hiring last year and less headcount allocated across e-FX but I am starting to see movement now with most bonus rounds completed.”
However, not everyone is optimistic. “There used to be a direct link between hiring in the FX market and the general economy. As the latter recovered so did the number of hires but there’s been a paradigm shift.
If the market recovers by20% are we going to see 20% more hires? No,” says Head. “Banks are still trying to do more with less and even if FX is having a good year, if fixed income is having a bad year it affects everybody.” Some recruiters also point to the escalating and widening Fix debacle as having an effect on hiring strategies this year. The FX market is under increasing scrutiny by regulators that are investigating allegations that traders at numerous banks colluded to manipulate currency rates
“Last year was compounded by the initial reports around fixing. It came out in print and suspensions began in October and it has continued since then, sitting like a cloud over the market,” says the London-based recruiter. “Anyone who is in front office FX, whether they’re in trading or sales, is having their transcripts looked at. This makes it difficult for banks to hire because they don’t know if a person is implicated. They just don’t know who’s going to get a tap on the shoulder. The repercussions are likely to cause the biggest shift in the working of the foreign exchange market in decades.”
An area in which the recruiters are in agreement is the increasing length of the approval process. “Head count is so hard to come by. Every head count has to be approved by global heads or by the global COO. The checks and the quality barriers are much higher than they used to be and the approval process takes longer and is more drawn out. In the past it could take two weeks, now it can take up to two or three months,” the London-based recruiter says. “This year is going to be as tight, if not tighter than last year. Banks are open to hiring, but the trend I’m seeing is the roles for which they are looking to recruit are more junior and they are being extremely careful about who they are hiring in terms of quality” the recruiter adds. “The bar in FX is much higher now”.
The full article is available in:
Profit & Loss Magazine, March 2014 | issue 149 | vol. 15