eFinancialCareers

Over-the-counter (OTC) derivatives are booming – leading to job opportunities for IT professionals in a traditionally closed sector.

"OTC trades don't require an intermediary in the way that exchange-traded derivates would," explains Joshua Anderson, principal headhunter with Anson McCade. "That makes them attractive to fund managers, who recognise an opportunity to make a lot of money."

In recent years, OTC trades have become increasingly complex, driving the need for sophisticated technology systems to handle key tasks such as pre-trade analytics and post-trade account handling. However, fund managers have relied for years on manual processes and faxes to process trades, says Mayiz Habbal, managing director of securities with financial consultancy Celent: "The result is that a third of trade confirmations contain some kind of error, meaning work has to be redone."

Celent reports that global spending on post-trade technology will increase from US$180m this year to US$232m by 2011. Even faster growth is being observed in pre-trade analytics and front-office applications by analyst TowerGroup, which predicts spending will increase by 10% annually over the next five years, to US$1.3bn.

What does this mean for jobseekers? "It means there's demand for skilled IT professionals with good front-office trading system skills," says Anderson. In particular, traders need IT workers with experience of working with portfolio management, risk analysis and trade execution systems. In future, as funds look to create more efficient trading platforms, there will be greater demand for IT professionals with good integration and Service Oriented Architecture (SOA) skills.

For successful candidates, OTC derivatives can be a lucrative career move, says Anderson. "People working in this market can expect to earn a 20% premium, as it's such a high-growth sector," he says. "But it's not an industry that does training, so not suitable for new recruits."