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Compliance

COMPLIANCE MARKET COMMENTARY, Q4 2016

• Article by BRUIN Financial

COMPLIANCE MARKET COMMENTARY, Q4 2016

MARKET OVERVIEW

2016 was another busy year in the Compliance space as levels of regulation and enforcement continued to increase, alongside the growing size and scope of Compliance teams in an attempt to satisfy the requirements of the Regulator. Despite this, 2016 has been the year of ‘unpredicted events’ which have had led to some volatility in the market.

In the build up to June’s referendum, we saw our clients significantly reduce their levels of hiring as they adopted a ‘wait and see’ approach to recruitment requirements. However, despite the unexpected outcome, we saw a marked increase in the level of recruitment following the result., showing that despite market variances Compliance remains as a key area for hiring. The outcome of the US election, combined with firms assessing their recruitment strategies for 2017, meant that the end of the year demonstrated a natural decrease in recruitment levels.

The Asset Management Compliance market has remained our busiest area, representing the majority of hiring during 2016. The Investment Banking arena by comparison has seen less activity particularly in H2. Several of the top-tier Banks completed their bulk hiring plans in 2014 & 2015, and therefore 2016 has seen more targeted recruitment and hiring into very niche areas.

Development and growth of regional hubs continues 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 many circumstances, this has resulted in the relocation of large volumes of London staff.

Role profiles

Asset Management

Advisory – Another busy year in this area that has seen extremely high levels of recruitment, covering both regulatory and product advisory. Many firms have hired product specific candidates, with technical expertise such as exposure to derivatives a significant requirement. Firms have been paying up to 100k to secure candidates with up to 5 years’ experience.

Similarly, candidates with broader advisory exposure to themes such as product development / fund launches, UCITS & ETFs, are still in high demand. In addition, the alternatives space is growing significantly, with leading asset managers increasing their presence in the alternatives space – spanning hedge funds and private equity.

Monitoring & Testing – This continues to be the busiest area of Compliance from a recruitment perspective. Several top tier Asset Managers all recruited into this space during Q2 & Q3. On average, a good monitoring candidate with 3-5 years direct experience within the asset management space will be looking for anywhere between 55-70k. Similarly, candidates with this level of experience will be looking for roles that offer greater responsibility, and ideally exposure to management. Without such progression, candidates will be moving purely for financial incentives, and are requiring increases of circa 20% on basic salary.

As a result of the increased competition in this space, organisations are being increasingly flexible about the background of candidates. Firms seem more interested in the methodology that candidates bring, and want to secure people who can demonstrate that they call manage the full life-cycle of a review, rather than having specific regulatory exposure. With this in mind, we are regularly seeing candidates move into asset management monitoring teams from audit or investment banking backgrounds.

Trade/Investment Compliance -This was our highest volume area in H1 of 2016. Pre and Post trade monitoring the more desirable skill set with Charles River systems experience ideally.   An area that seems to be seasonal with much of the movement happening early in the year. Roles requiring the coding of the investment restrictions have 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.

Financial Promotions – This is a notoriously tough area to recruit into, particularly around the 50-70k mark where we have seen consistent volume throughout the year. There are some good juniors, and some senior candidates who have extensive Distribution Compliance experience, but the market is very competitive at the mid-level. Firms have particularly struggled when looking for specific language skills or exposure to multiple jurisdictions. The disparity in pay between contractors and permanent candidates is most significant in this area than any other and with the small pool available, candidates with 3 years of experience are demanding up to £400/day.

 

Investment Banking

Product Advisory – The demand has remained very strong for front office advisory candidates within Investment Banks, with many firms requiring specific experience as they continue to enhance their advisory teams. The busiest area in Q4 was covering the FX piece, with most hiring taking place at VP level.

Monitoring & Testing – The busiest times in this space were at the start and end of 2016. The larger banks are still bolstering their teams in response to increased regulatory scrutiny, and therefore there remains a shortage of good candidates in the market, certainly at the VP and Director levels. The biggest trend from a candidate perspective is that firms are more flexible about the background of candidates, with more movement between the buy and sell side and willingness to consider a transferable background such as Internal Audit.

Trade Surveillance – This has been an area that we saw a lot of movement particularly in Q2 & Q3. The continued trend is for the larger banks to structure their teams aligned to asset class. The mid size banks do tend to function cross-asset, including e-communications surveillance.

The larger banks have struggled to retain candidates functioning in an e-communications specific role with feedback indicating that more variety is needed. This is a move that we may see over the next 12 months with Trade & e-communications merging to a degree

Contract Market

Over the last quarter we have seen more hiring on the asset management side and demand was mostly for generalist Compliance candidates, usually paying a rate of £300 – £400 per day. However, as a result of a severe shortage of top tier candidates, desirable contractors are able to command in the region of £450 – £550 per day.

One of the areas that have reduced in hiring has been Guideline Monitoring and there has also been a  significant lack of movement within the Trade Surveillance area. We found that most of these roles follow the trend of either being released as permanent or companies tend to now promote monitoring candidates from within.

PREDICTIONS

Whilst 2016 will largely be remembered for the significant political events that took place, we believe that 2017 will return to ‘business as usual’ with high levels of recruiting across the Compliance space. We are only a week into the year, and already we have seen significant activity across the Investment Banking and Asset Management space, which is positive reflection on increased stability within the markets.

However as the requirement to hire increases, along with the demand for good candidates, so does the competition when hiring. With this in mind it is imperative that firms are flexible where possible, but also manage the recruitment process as effectively as possible to ensure that they are securing the best talent in the market. The three main areas that we predict continued hiring are:

Trade Surveillance – whilst this is an established functions in Investment Banks, buy-side firms are developing larger teams in this space, and are willing to bring in experienced candidates from a sell-side background

Guideline Monitoring – the first few months of the year are always busy in this space, and with lots of candidates looking to contract on high daily rates, it can be an incredibly competitive market to recruit into from a permanent perspective

Advisory – both regulatory and product specific advisory roles at a senior level (VP and above) continue to be in high demand. Candidates with MIFID II experience and broader regulatory knowledge will be in high demand over the next few months.

For more information about the compliance market please contact one of our consultants.