Investment banks' operations divisions have become much more complex in recent years. Aside from the range of securities, financial regulators are also demanding more from the reporting of these trades, meaning that technology, processes and the risk management profile of the bank are all being more closely monitored.
All of this means an evolution of the careers of investment banking operations professionals. You still have what most banks will deem their ‘core’ operations functions, dealing with clearing and settlements, but there are also the strategic roles that are generally better paid and run out of banks’ headquarters in major financial centres.
Trade Support: Once the trade is executed by the trader, the trade support team takes over. You have responsibility for ensuring the smooth running of the transaction. This means booking it, ‘reconciling’ it – ensuring the price of the security has been correctly paid – and dealing with any ‘fails’, namely sorting out any issues with trades that have not been processed properly by the IT systems
You are the first line of defence for the front office, ensuring that traders’ PnL (profits and loss) are accurately tracked and that trades go through, and you'll also be a central point of contact for queries from other parts of the back office regarding clearing and settlements. Trade support roles also involve continually assessing the systems and processes and trying to make them more effective wherever possible.
‘Core operations’: This is broad term for all the different roles within investment banks’ operations teams that involve the more ‘traditional’ back office roles. Core operations positions involve clearing and settlements, as well as ensuring that all the relevant documentation around a particular transaction is completed.
These are the cogs in the financial system that must continue to turn in order to ensure people get what they paid for. Again, though, these positions are broad and complex.
The most basic of these roles would involve the clearing and settlement of ‘vanilla’ securities – namely, stocks and shares and regular bond products. Then there are roles that deal with derivatives products – these trades can be more complex and require more expertise. Therefore, jobs that deal with derivatives tend to pay a little more.
Then there’s the huge $632 trillion over-the-counter (OTC) derivatives market, which has traditionally been more complex and fragmented than other parts of the financial system. Clearing outstanding more trades in this market is critical to regulatory reforms of the derivatives market, so operations professionals in this part of the business tend to be specialists. OTC derivatives clearing analysts will tend to step in to deal with 'exceptions', which is when one or both counterparties have a problem with the details of the trade, and will also liaise with clients, counterparties and vendors to deal with any queries. Again, when it comes to pay, OTC derivatives clearing and settlements professionals are top of the tree for clearing and settlement professionals.
Programme and change management: Process improvement within investment banking operations is a continual concern for large global institutions. Part of this is cost-saving, but ensuring that their back office runs as smooth as possible is also all part of good client service. And in banking, clients are king.
Previously, banks used to employ contractors to deal with change management projects, but in recent years these roles have transformed into a core part of the operations teams. Looking at workflows, documentation, existing processes and coming up with new strategies to improve operations divisions are absolutely key. If you make it to programme manager on a change project in operations, you can earn upwards of £150k, according to the Robert Walters salary survey. This is by some way the highest paying role in operations outside of the upper ranks.