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March 30, 2015

The state of the financial labour market

Filed under: Forex Strategies — Tags: , , , — admin @ 4:43 pm

As many risk takers are likely to be concerned with locking down positions and profits into month and quarter end, Macro Man thought he would address an issue that’s near and dear to his heart, the state of the labour market for market professionals.

He spent a few minutes sifting through efinancialcareers, an online job portal that pretty much does what it says on the tin.  First, he looked at openings for portfolio managers:

As you can see, the query generated 290 results, globally.   OK, what about looking for traders?

Hmmm…507 results, but as you can see, a lot of the results are for quant traders because hey, HFT front-running is perfectly legal and what could ever go wrong?  If you sometimes feel like trading these days is like living in The Matrix, you just might be on to something.   A search for C++ yields a whopping 1434 results.

If you apply for one of these roles and are contacted by an “Agent Smith”, watch out!  On a slightly more serious note, perhaps the best piece of advice that Macro Man can give young readers interested in a financial career can be summed up in 3 words.  Learn.  To.  Code.

Even more than coding, however, there is one area of finance that is in a roaring, runaway bull market with no end in sight.  Some may call it a bubble, but as you know the authorities always feel uncomfortable identifying bubbles in real time.   Indeed, listen to Yellen’s Congressional testimony and you can see certain members cheering lustily for the trend to continue, nay accelerate.

Step forward Compliance officers, for whom there are a stunning 3093 vacancies!

There you have it folks, financial markets in 2015- where demand for compliance folk outnumbers that for portfolio managers by more than 10-to-1.  The irony, of course, is that in their zeal against too-big-to-fail on the banking side, the authorities have significantly raised the AUM bar for what constitutes a viable business proposition on the fund side.  As a result, in some sectors at least assets have concentrated in huge funds with the built-in compliance infrastructure to satisfy the rampant bull market.

One can only hope that come the next market crisis, they do not prove to be too big to fail.

12 Comments »

  1. Nice divergence from the usual discussion – I think the odds that HFTs survive beyond the next 3-4 years are quite low – I mean someone would have to be blamed for the next meltdown.
    As for coding, there is a lot more to it than learning if/then loops – sure young traders can go read a python book, but they won't be 'learning' it in a setting that develops project management and modular development skills, and anything less than that is basically elementary school level stuff.

    Comment by washedup — March 30, 2015 @ 4:57 pm

  2. Or you just outsource the coding to someone on £22k a year as you would with a secretary .. "take come code for me Mr. Moneypenny… " And have them come into work with you, much as you carry a laptop

    Comment by Polemic — March 30, 2015 @ 5:48 pm

  3. C# is what you want to teach yourself!

    http://www.microsoftvirtualacademy.com

    Comment by the black hole — March 30, 2015 @ 6:28 pm

  4. H/t to Buttonwood:

    Exchange-Rate Pass-Through and US Prices

    Comment by Anonymous — March 30, 2015 @ 7:08 pm

  5. Worked in Cta sorry…

    @abee: software developers need to code… Pm need to manage money… then if your way to manage money is to develop a trading system ok..you need to write some code

    Comment by TheBondStrategist — March 30, 2015 @ 7:26 pm

  6. Good to see that many of you noticed that. .. Pm vacancies are really a few… but better be that than doing a boring compliance job… real problem is that it's hard to change.
    can't understand why people need to code and what to code c++ or phyton. and i've worked in cat

    At 36 years I feel me so old… no down year since 2006 are unimportant now… better a 3 years 20%run yearly on black boxes…

    Comment by TheBondStrategist — March 30, 2015 @ 8:21 pm

  7. Learning to code should mandatory for any field, whether biology, business or arts. Software is eating the world and you should know the basics.

    In the markets, the coders are not just for HFT or compliance, but think about trading systems, risk management, research etc. Every big fund has some sort of IT system to perform these functions.

    CV as for raising money, it is such a chicken and egg problem. I see lots of ppl moving to 'platforms' like DB, Jefferies & Citi. especially macro/futures guys. But pressure on fees across the board is a big issue and only going to worse meaning scale is a big issue for emerging managers.

    http://www.cumber.com/content/special/blanchflower-levin-labor-slack-32415.pdf

    AMAZING paper on the labour markets, a MUST read for all

    Comment by abee crombie — March 30, 2015 @ 9:07 pm

  8. There are different types of HFT, market making when done properly does function in any kind of market, adding liquidity and making money. In a sense there is no difference to an old model of prop guys executing through flow guys. The issue is that not every HFT market maker is good at what it does, and some do get carried out. But the market is big and there is place for everybody.

    Comment by Nick — March 30, 2015 @ 9:16 pm

  9. SNB moves wipes a few guys out. Risk no swiss positions now it's too dangerous. …

    Compliance; your national driving license has an address that does not match the one you provided. "But I rent and moved". Please provide passport ID. "but that has no address & I feel uncomfortable with identity theft". Compliance " please provide passport".

    Comment by Anonymous — March 30, 2015 @ 9:49 pm

  10. Oh MM. A subject sooo close to my heart. Well done rais8ng again the issue of adjusted cost base making tipping the playing field. A quant uses historic data do is wrapped in the past. The best they can do is is get closer and closer to the present with their inputs but as for the future? That's why they will never pick up a 'Russia', or a Saudi oil decision or a catalogue of other political behavioural decisions however much C++ they know.

    And that compression to quant and compliance leaves swathes of the market uncovered. Or does it? It actually means that unregulated unquanted brains can make a buck and this category includes individuals and even day traders and everyone else who the regulator thinks too small. So we COULD see performance swing from the big boys who are being dummed and cost based into behomth s whose oil tankers of positions take weeks to turn, to the nimble small individual.

    never try to constrain a market. It will evolve to beat you.

    Comment by Polemic — March 30, 2015 @ 9:59 pm

  11. From personal experience, there's a fairly large overlap between the demand for "C++" and the demand for "compliance". A large slice of the former openings are for creation of tools to facilitate more of the latter. As for your best advice for young readers, I'd just like to append "…properly, or you'll just make it worse for everybody" to it. The proven capacity of a large number of people to shoot both of their feet off with Excel alone does not portend anything good for when they believe they can "code".

    Comment by Unclear Wessels — March 30, 2015 @ 10:52 pm

  12. Oh man MM, and here I thought you couldn't get much better at this!

    I wholeheartedly agree. Let me second the point on coding. Even as an economist you are very unlikely to get a seat at a desk anywhere unless you can put Python, C++, etc on your skills sheet. I doubt you ever use it in the end, but it is a bit like math skills in the old days (of course these are the same in some sense). You needed to show that you have solved that 5th degree Taylor expansion, under duress at an exam somewhere, but you never really had to use it. I don't like where the business is going here, but I have learned to accept it. If you are infected with the financial markets/global macro bug, you need to be creative in finding a way to use that and make a living I suppose.

    There is nothing funnier, even for an economist, to sit on a diverse trading desk with a mixture of old-school traders/PMs (that would be you MM, LB, Pol etc) and young PMs in spe. But I have learned to accept that these places don't really exist anymore, or they are few and far between! Now, it just a bunch of quants being watched over by compliance outnumbering them 3-to-1. The silver lining for macro guys, though, is that the demand for them will not go away, but this then brings me to your ultimate key point IMHO. The size of AUM needed to run a viable business. I have sat on a desk in a small entrepreneurial fund, and raising money was like head butting an oncoming freight train.

    "Oh, we really like your strategy and your PMs, but we can't really give you money until you get above $xxxM … etc etc. I am not sure how this is resolved. If, for example, a bunch of a mega funds buckle in the next crisis, I assume that there will be a push/demand for divergence (smaller fund types) again. Or maybe just a push for even more compliance!

    Comment by CV — March 30, 2015 @ 11:34 pm

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