It’s been a stressful year so far for equities traders in Hong Kong – first Standard Chartered cut about 100 jobs in the territory as it shut down its equities division, then came huge plunges in local stock markets.
“They’ve been redundancies in Hong Kong – banks are cutting down loss making trading desks so there are fewer trading jobs here now,” says Amy Ho, a director at recruiters Ambition in Hong Kong.
Increasing numbers of unemployed or generally disillusioned Hong Kong traders are now asking recruiters to help them land jobs in…market risk. “We’ve definitely seen quite a few traders who have made the switch to risk management recently,” says Rouella Landicho, manager, risk, legal and compliance at recruiters Morgan McKinley in Hong Kong.
“When a trader is laid off, it’s not always easy to find another trading job in this volatile market,” she adds. “A lot of banks have exited cash equities or equity derivatives and the traders can either move to the buy-side firm or to a ‘safer’ role in risk.”
Most of those who’ve made the move in Hong Kong are experienced traders going into risk roles at VP rank and above. “They move because of lower trading volumes but also due to increasing automation,” says Matthew Hoyle, chairman of search firm Matthew Hoyle Financial Markets in Hong Kong. “Trading is a young man’s game, managing risk is an old man’s game. As trading becomes more automated older traders who can’t program C++ or scripting languages like Python or JavaScript are put to use managing risk.”
Less stress
Market risk jobs can also appeal to senior traders because they offer a less stressful day-to-day existence with a more stable career path. “Some feel burnt out after a few years in trading and want a less pressurised job while still staying within banking and utilising their skills,” says John Mullally, director, financial services, at recruiters Robert Walters in Hong Kong.
And generally speaking their skills are sought after at global banks in Hong Kong right now. “Traders make very good candidates for market risk since they look at risk management in every trade they make,” says Landicho from Morgan McKinley. “They know financial products, how financial markets work, and how risk is managed from a front office perspective.”
“Some refer to this as hiring the poacher to be the gamekeeper, but risk management is at least half of a trader’s job,” says Nick Wells, a director at search firm Webber Chase. “And it allows risk management cleaner communication with the front office – so potentially less conflict, more innovative solutions and higher profits from lower risk taking.”
Traders who become risk managers will inevitability take a compensation cut – bonuses for Hong Kong risk managers peak at 40% of salary, while for traders they often top 100%, says Landicho.
But base pay in risk is rising faster than in most other functions – MDs in Hong Kong now earn more than US$250k on average, according to our salary chart published last month. “All-in packages, factoring in the tax regime, make Hong Kong one of, if not the, most competitive location globally in terms of pay for risk management professionals,” Chris Jackson, a director at Pure Search & Selection in Hong Kong, told us at the time.
“Higher compensation levels are a new pull into risk, as is the potential to maintain close links to the financial markets,” says Wells from Webber Chase. “Risk is now rapidly evolving into a profit generating function, assisting trading teams to open new markets and reduce exposure through innovative advice.”
And when trading jobs come flooding back to Hong Kong, will this year’s risk converts simply step back into their former profession? Unlikely. “It’s generally the end of your trading career when you move to risk – going back into trading is very, very hard,” says Hoyle.
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