If you’re a technologist languishing in the middle office of an investment bank, how do you move to where the big bucks are?

Get to know the instruments

The days are gone when banks would take on IT professionals with the technical know-how, but a lack of financial nous. Now, there’s no way you could make it without an understanding of the particular financial instrument you’re working with.

Chris Pickles, head of investment banking and global accounts at BT Radianz, says: “If you can show an understanding of trading, that will help draw you to the front office. The technology that enhances trading is secondary. You have to really understand the instruments and that can double your salary.”

A need for speed

In the back office, timescales are managed in weeks, in the middle office it’s days, but in the front office it’s microseconds. Twelve months ago, milliseconds were skimmed off trade speeds, but that’s for slowcoaches now and instead performance is measured in microseconds – 1,000 times faster.

“Good staff who understand how to reduce latency without compromising the system’s integrity are a real value-add for the front office,” says Paul Elworthy, associate director in the IT and banking finance division of recruitment firm Hudson.

Low latency is the buzz word, reckons Pickles: “Key people will know how to develop the integration of hardware, software, network and operating systems for a low latency solution.”

Standards

For the post-trade activity on the middle office, you’ll be dealing with the likes of SWIFT for counter-party traffic, but the gold standard in the front office pre-trade world is the FIX protocol. SWIFT averages 12m messages a day, whereas FIX averages 180m. The first is all about security and reliability, the second all about speed, volume and low latency. So you need to bone up on FIX…

Delve into the minutiae

People with technical knowledge of systems like C#, C++ and Java might not be ten-a-penny, but don’t assume familiarity with these systems will land you the top front-office jobs.

As it’s all about reducing the latency of the system, Pickles reckons it’s essential both to push the existing systems to “the fastest, most extreme way of doing things” and to strip away current software coding.

“Rather than having something intermediate like C#, C++, Codex or Basic, you should be speaking directly to the computer in a language it understands, and that means taking it down to the machine code.”

Stay or go?

Don’t assume that because you’ve been in the middle office for some time you can automatically ascend to the ivory towers of the front office.

In fact, Chris Skinner, chairman of the Financial Services Club, reckons SocGen’s rogue trader, Jérôme Kerviel – who manipulated his knowledge of middle-office systems to hide his dodgy dealings – might have made the rout a little harder.

“Anyone who transitioned from back and middle to the front office, whether it’s tech support or execution dealing, has the potential to be another Nick Leeson or Jérôme Kerviel,” he says. However, he adds: “You can make the transition, but you would go from beginning in non-sensitive environments, back and middle office straight-through-processing, core systems, eventually graduating to the front office in quantitative and algorithmic trading. Still, banks will subject employees to an ongoing vetting process.”

But were you to leap out into the job market without any front-office experience, would you even be considered for a top role?

Maybe, says Elworthy: “There are no hard and fast rules. Some hiring managers will absolutely insist that somebody has front-office experience, but there are others who will consider someone who is technically excellent and has a basic product knowledge.”