Insights

Compliance

COMPLIANCE MARKET COMMENTARY, Q1 2016

• Article by BRUIN Financial

COMPLIANCE MARKET COMMENTARY, Q1 2016

The compliance market continues to be extremely buoyant, continuing the trend within this space. However, 2016 hasn’t quite reached the levels of recruitment seen in previous years, largely due to the volatility within the financial services at present. During 2015 we witnessed a surge in recruitment on the sell-side with firms bolstering their compliance teams in London and in regional locations, but due to uncertainty in the market and some high-profile changes within the tier-one banks, we are yet to witness high levels of recruitment within this space. In contrast, there have been high levels of recruitment within the asset management space as firms are growing their teams in response to increased requirements from a regulatory perspective.

The first quarter of every year is notoriously quiet as firms go through performance reviews for employees, and review the wider strategy in terms of recruitment. The majority of bonuses have been paid out now, and whilst they haven’t been as high previous years, firms are consistently doing more to keep the best talent within their organisation. Even so, there is natural attrition following bonus period, so we are seeing increased movement and firms that previously had hiring freezes are starting to commit to growing their compliance functions over the next quarter. Whilst firms are attempting to increase levels of direct recruitment, specialist and technical areas such as compliance will still require firms to partner with specialist recruiters.

Q1 in numbers:

  • The split for compliance jobs between buy (A&WM) and sell side (IB) are heavily weighted towards the former. 69% of jobs are in asset or wealth management compared to 28% in the banks. The other 3% being focused at the ratings agencies or regulatory bodies.
  • The 69/28 divide is huge when you consider the size of compliance teams at the banks which can be in the hundreds when compared with smaller functions on the buy side.
  • Of these jobs, 28% have been focussed on product advisory, portfolio/guideline monitoring 20%, desk reviews monitoring 14% and finally surveillance 5%.

Role Profiles: 

Banking

Financial Intelligence; Financial Intelligence has seen tremendous growth since the end of 2013. With each of the top banking institutions requiring more diligence and information for their risk management programs particularly in respect to Fraud, Sanctions and AML. We have seen teams double in size over the course of 2015 with hiring continuing in the space at the beginning of 2016. However, there is a feeling that as this area isn’t directly supporting revenue generating areas of the business, it could be transitioned to regional locations.

Monitoring & Testing; Always a common theme throughout the year as the Monitoring space is very fluid and we seem to see a lot of movement. 4 of the top tier banks have been hiring already in 2016. Skills required are predominantly desk based reviews with ability to plan and scope thematic reviews autonomously.

Surveillance; The surveillance space was certainly a hot area during the latter stages of 2015. This has continued in 2016 with VP level positions at a number of firms. With MAR implementation requiring plenty of attention much of the recruitment has been growth as apposed to replacement hires. Something that is a positive glimmer of hope in a banking market that has otherwise seen a freeze.

Asset & Wealth Management

Investment/Portfolio Compliance; This has been our highest volume area in Q1 of 2016. Pre and Post trade monitoring the more desirable skill set with Charles River ideally. An area that seems to be seasonal with much of the movement happening early in the year. The coding of the investment restrictions has been difficult to recruit for from a permanent perspective as the career path seems to lead to contracting in the long term so employers have been pushed to consider profiles with limited experience but transferable skills, particularly with it being such a competitive space.

Product Advisory; UCIT’s, ETF, Wealth Management and Fixed Income area the product lines in demand currently. Again it’s a very small candidate pool and the institutions moving quickly are the ones securing the best talent. Some fund managers have been hiring specific roles for as long as 6 months.

Overview of the Contract Market

After a slow Q4 2015 in terms of contract Compliance recruitment, Q1 gradually started to pick up pace towards the end of the quarter. A broad range of top tier investment banking institutions have been in the midst of recruitment freezes (especially with regards to contingent workers) since the latter months of last year and the majority of these are still in effect now. Near shoring of more Operations-focussed Compliance functions is becoming more commonplace as employment costs are lowered in areas such as Birmingham and Bournemouth.

In terms of areas that have been busy, guideline monitoring has maintained its high volume of recruitment across the contract market, as well as permanent and candidates with experience and strong product specific knowledge – as opposed to cross asset knowledge – are now valued very highly. Regulatory change is an area that is still relatively high in volume although with deadlines pushed back for certain regulations; this is now not as urgent a requirement as before.

Going off the tail end of Q1, and with Q2 2016 in mind, it does seems that contract Compliance recruitment is going to pick up quickly as it has traditionally done in the years preceding now.

Predictions:

Quarter 2 of 2016 will more than likely be recruitments busiest months of the year following bonus period, as is always the case cross disciplines.

Vacancy volumes hit their peak in April and May with processes taking a minimum of 3-4 weeks and sometimes longer in the larger institutions. Niche roles such as product advisory, financial promotions and guideline monitoring will be key areas to watch out for as the market has a clear shortage of candidates with this skill set. Particularly at the Senior AVP/VP level.

Regional hubs are continuing to be a theme across the banks with many of the top tier institutions actively relocating roles to locations such as Birmingham, Manchester and the south coast. In some circumstances this can be a new hire but if it’s not a London critical replacement hires are near shored.

Movers
The most significant trend in the past 6 months, is that firms are ‘upskilling’ their compliance teams. As a result, there have been some very high profile movers:

(Banking)
• JP Morgan – Head of Compliance left the industry
• JP Morgan – Head of Markets moving to Deutsche Bank to replace the MD who moved to Credit Suisse.
• HSBC brought in a number of new recruits for their markets team including a Head of FICC and co Head of Markets for Europe.
• Bank of America’s Head of FICC Compliance moving to TD Securities.

(Asset & Wealth Management)
• JP Morgan – Head of Compliance for their Asset Management business to Blackrock
• Credit Suisse- Head of Compliance for their Private Bank moved internally to APAC
• State Street – EMEA Head of Compliance left, and has been replaced
• CF10 left Deutsche Bank and was replaced by an MD from Blackrock

BRUIN NEWS

We recently held another successful breakfast seminar on MiFID II for the Investment Management Sector, with guest speaker Arjun Singh-Muchelle.

Arjun is the Senior Advisor, Regulatory Affairs (Institutional & Capital Markets) at The Investment Association, where he works on all capital market and dealing-related issues.

Prior to this, Arjun was the Head of EU Affairs at the British Bankers’ Association. He has previously worked at the European Commission and started his career at Canada’s financial services regulator, the Office of the Superintendent of Financial Institutions.

For more information about our compliance breakfast seminars please contact one of our Compliance consultants.