Demand for IT skills rising as credit crunch shows flaws in bank systems

Demand for IT skills in the financial services sector is rising, after the "credit crunch" highlighted weaknesses in firms' computer models, ReThink Recruitment said last week.

Demand for IT skills in the financial services sector is rising, after the "credit crunch" highlighted weaknesses in firms' computer models, ReThink Recruitment said last week.

Banks are looking to improve the ability of back-office systems to cope with sudden spikes in trading volumes, such as those caused by falling share prices on the back of problems in the US mortgage market, said the recruitment agency.

Some fund management companies and bank trading desks may need to rebuild the computer models that determine when to buy and sell investments.

Financial firms may also need to improve their electronic clearing systems, some of which seized up because of high trade volumes during the credit crunch.

ReThink Recruitment said many of the funds that invested in the mortgage-backed securities at the centre of the crunch were quant funds. These funds, which make trades that are determined by computer programs using historical data, are believed to have sustained some of the greatest losses during the market uncertainty.

Jon Butterfield, managing director at ReThink Recruitment, said, "Some of the funds that sustained the heaviest losses are computer-driven, which means their trading decisions are essentially pre-programmed. These funds will need to look at refining and testing their computer models so that they are better equipped to predict and respond to market volatility."

Back-office IT systems at clearing houses and exchanges that process trades needed to be strengthened, Butterfield said. "Computer funds tend to use the same models, so they often mimic each other, which led to sudden surges in volumes during the height of the crisis."

About 60% of trades on the London Stock Exchange are now computer controlled, compared with 40% in 2006.

Butterfield said a growth in electronic trading platforms meant IT had become more important in financial markets - leading to rocketing salaries for skilled staff. Some contractors can now charge more than £1,000 a day, he said.




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