The Markets in Financial Instruments Directive (MiFID) has certainly shaken up the share trading industry, but has it created more job opportunities for IT professionals?
Following the arrival of MiFID 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 firms keep in-house costs to a minimum.
MiFID is EU legislation that aims to encourage more people to buy and sell shares through regulations that improve competition and consumer protection. As a result of the market liberalisation that MiFID brought in, there are now more venues for trading shares and reporting the trades that are made, which is a vital service to investors.
These 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.
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.
Exchanges use software to automate trading through algorithms and the 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. These factors mean individuals with the right skills are in high demand.
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 want IT recruits with experience in the sector.
"On the trading system side, it is people with experience in developing and building fast trading systems. 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," Taylor said.
Turquoise, which is an alternative trading venue that was 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 is 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 warehouse and data mining," said L'Hullier.
Because technology is so important, the company 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 arising after MiFID are avoiding many of the high IT recruitment costs by using specialist suppliers to do the building and support of platforms.
L'Hullier said specialist in-house skills are essential to guide partners that are developing systems for Turquoises. "We [create] new ideas and move from concept to implementation by using internal resources for inception, project management, [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 means there will be a lot of 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 has increased demand for support from outside companies.
"In order to get going, venues have to outsource as many functions as possible. It is difficult and time-consuming to build competencies in these specialist areas," he said.
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 the firm's development operation in Vietnam does development for financial services firms using .net 3.0.
He said the combination of a shortage of skills in the UK and the pressure financial services companies are under is increasing offshoring.