TheMarkets in Financial Instruments Directive(Mifid) has certainly shaken up the share trading industry,
but has it also created more job opportunities for IT
professionals?
Following the arrival of the EU directive in November and the
new companies it spawned, more opportunities now exist for IT
professionals in a sector where IT is business-critical and highly
complex. But many traditional IT infrastructure and support roles
are destined to be
outsourced as businesses seek to keep in-house costs to a
minimum.
Mifid is an EU law that aim to encourage more people to buy and
sell shares by setting rules to boost competition and protect
consumers. As a result of Mifid's market liberalisation, there are
now more venues for trading shares and reporting trades, which is a
vital service to investors.
New venues include trading exchanges such as
Turquoise and
Project Rainbow, which were set up by investment banks to take
on the London Stock Exchange, as well as reporting venues such as
MarkitBoat,
which give investors real-time information about what is being
bought and for how much.
Trading exchanges rely on fast and reliable IT systems to
provide information and trade execution in real time to attract
investors. Companies selling data about share transactions need to
have connections with as many trading venues as possible and must
be able to transfer the data collected to investment companies in
milliseconds.
The exchanges use IT to automate trading, and trades are routed
through high-performance networking equipment to reduce the time
taken to complete deals. The delay between a transaction being
placed and the deal being made is known as latency.
Brian Taylor, CTO at trading exchange
Plus Markets, which
has seen its trading activity increase since Mifid was introduced,
said many of the new venues want to be up and running as quickly as
possible and as a result are looking for IT recruits with
experience in the sector.
"On the trading system side, that is people with experience in
developing and building fast trading systems," Taylor said. "These
are software engineers with skills in languages such as C++. On the
comms side, it is those with experience with high-performace,
fault-tolerant systems."
Turquoise, which is an alternative trading venue set up by nine
major investment banks as a result of the changes introduced by
Mifid, is currently recruiting staff. Yann L'Huillier, CTO at the
company, which plans to launch in September, said it was currently
recruiting for positions such as IT manager, security officer and
technical account managers.
"From a skills point of view, our technology evolves around
Java, Linux, networking, streaming technology and complex event
processing as well as data warehousing and data mining," said
L'Hullier.
Because technology is so important, Turquoise wants to adapt the
best candidates to the job and then adjust the job position
depending on their skills and its needs. "This is something we can
do as a start-up that is not possible to achieve when you are a
bigger organisation," said L'Hullier.
PJ Di Giammarino, chief executive at financial services
think-tank JWG-IT, said IT staff currently in investment banks
could move to these new trading and reporting venues because they
have the right kind of IT skills and experience. "With the current
constraints that investment banks are under, you will see some [IT
staff] migrate from them to trade execution and reporting venues,"
he said.
But it is only the specialists who are sought for in-house roles
because many of the new firms are avoiding high IT recruitment
costs by using specialist suppliers to build and support their
platforms.
L'Hullier said specialist in-house skills were essential to
guide partners developing systems for Turquoise. "We [create] new
ideas and move from concept to implementation by using internal
resources for inception, project management and [sector expertise],
and we use our technology suppliers for hosting as well as
operating our mission-critical and office equipment." Of about 100
people involved in the IT development process at Turquoise, only
eight are internal staff.
According to Di Giammarino, this approach will stimulate demand
for the right skills within the IT industry that supports the
exchange sector.
Jonas Rodny, senior communications manager at
OMX Technology, which supplies technology and skills to trading
venues, said the arrival of new venues had increased demand for
support from outside companies.
"To get going, venues have to outsource as many functions as
possible," he said. "It is difficult and time-consuming to build
competencies in these specialist areas."
Outsourcing the development of complex financial systems to
lower-cost nations is also an option, according to Paul Smith,
global managing director at Harvey Nash. He said his firm's
development operation in Vietnam does work for financial services
companies using .Net 3.0.
He added that the combination of the UK skills shortage and the
pressure on financial services companies was driving growth in
offshoring.
More companies relying heavily on IT inevitably means more IT
jobs. But in a specialist sector such as share trading, the
traditional IT role has been moved to external service providers
while specialists do internal work and liaise with suppliers.