Insights

Compliance

COMPLIANCE MARKET COMMENTARY, Q1 2017

• Article by BRUIN Financial

COMPLIANCE MARKET COMMENTARY, Q1 2017

MARKET OVERVIEW

The compliance market continues to be buoyant and the start of 2017 has certainly been no exception. We have witnessed a 5% increase in job volume in comparison to Q4 of 2016, which is evidence that the market is picking up and that business is returning to normal after an eventful year from a political perspective. As a result, we witnessed a surge of hiring across the buy and sell side.

Increased stability within financial markets, and the continued influx of regulation impacting Financial Services has resulted in high levels of hiring during the first quarter of 2017. Regulatory specialists remain in high demand, and the market remains candidate driven. Hot topics such as Market Abuse and MIFID II remain high on company agendas, and the result is increased demand for candidates with these skill-sets. However, some firms remain sceptical of market volatility, and as a result have shifted towards hiring candidates on fixed term contracts.

The end of Q1 naturally slowed down slightly as the majority of organisations approach their annual salary / performance reviews, but once bonuses were announced we witnessed the usual movement within the market.  On the whole, bonuses for compliance staff were received well, as firms continue to do their upmost to retain the best talent within their organisation – this is certainly the case in niche areas such as front office advisory.

Role profiles

Asset Management

The asset management space was definitely the busiest during Q1 as firms continued to grow their compliance departments. Whilst they are still not the size of compliance teams on the sell-side, these teams are growing significantly and shifting from a generalist mentality into a more role specific structure. As a result, we have witnessed multiple firms hiring similar roles at any one time, therefore increasing the competition for strong candidates with buy-side experience.

Advisory – This is still a fundamental area of recruitment with experienced compliance professionals in high demand. There has been a lot of movement within the Front Office Advisory teams of the leading asset managers as firms look to recruit candidates with specific product knowledge.

Traditionally, only the global asset managers have teams big enough to align by asset class, and as organisations grow their advisory functions they are becoming more creative about how to resource people for these difficult to fill roles. We have seen an increase in candidates moving from guideline monitoring / investment compliance backgrounds into front office roles, as they have good asset class knowledge as well as sound understanding of the overarching regulations (such as UCITs ) which are impacting firms.

Guideline Monitoring – The guideline monitoring space is always competitive, and this has continued in 2017. We have seen an increase of firms implementing new systems, with Aladdin being a very popular option currently. Firms that are willing to be flexible in relation to systems experience are more likely to secure good candidates. However, we continue to see a shift in candidates with strong coding experience transitioning into the contract market, where experienced candidates can secure day rates of £600-800.

Thematic Monitoring  – Compliance Monitoring continues to be our busiest area as firms look to bolster their monitoring capacity resulting in huge competition to secure the best talent. Candidates that can demonstrate that they have managed the full review lifecycle are high in demand, and are securing salary increases of circa 20% when moving. This is an extremely candidate driven space, but firms that are willing to be flexible in terms of background are those that are successfully hiring. We have witnessed an increase of candidates moving between the buy and sell side, as well as candidates moving from audit into monitoring, as whilst they don’t possess the asset management experience, they do bring the monitoring methodology.

Trade Surveillance – Buy side firms are recruiting heavily in this space as firms respond to Market Abuse regulations impacting them. As a result, they are enhancing their trade surveillance capacity, and are having to build teams with this capability. Whilst it is a relatively new discipline within the buy-side, there is not a huge talent pool to source from, and firms are exploring candidates coming from the sell-side or exchanges.

Volatility of the markets has impacted the sell-side more significantly but due to the size and scope of the leading investment banks there is always a requirement for good compliance staff. Whilst some firms remain dormant from a recruitment perspective, others have turned the taps on and are hiring in bulk.

 

Trade Surveillance – Similar to the buy-side, Trade Surveillance has been a buoyant space with some of the larger Investment Banks hiring in bulk. Whilst there is always demand for surveillance candidates from competitors, we have also witnessed an increase in firms looking at alternative backgrounds such as ex-traders or product controllers.

Advisory – Front Office Advisory continues to an incredibly busy and candidate driven market. Candidates with niche product knowledge such as futures, options, or even e-trading exposure are securing huge increases in basic salary when moving. A strong VP will be looking at salaries of up to 120k, and firms are paying out big increases to encourage them to move.

Data Protection – Due to the General Data Protection Regulation being implemented by May 2018 and the constant threat of cyber security, firms have seen a much higher volume in Data Protection than normal. With a higher demand for Data Protection Officers, firms are keeping an open mind with regards to the area  in which candidates have gained their experience, with senior figures even across the retail side being considered for roles within investment banks.

PREDICTIONS

Q2 has already started in a very buoyant manner, with attrition rates high following bonus season. This increased movement in the market creates opportunities elsewhere in areas where firms were not previously hiring.

On the asset management side we tend to see high levels of recruitment within Guideline Monitoring, as well as traditional areas such as Thematic Monitoring and Front Office Advisory. We have already witnessed high levels of recruitment in this space, and this will continue over the next couple of months.

From a banking perspective, there does continue to be a trend of firms near-shoring some of the more operational compliance disciplines, but there is still a demand for strong candidates with technical skill-sets in areas such as MIFID II, Volcker, and the enhancement of surveillance systems / processes.

Overall, competition remains high for top tier talent in the city and we see on average salary increases of 20-25% when firms move from one permanent role to another. We envisage that this trend will only continue over the next few months.