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Careers in Financial Derivatives

Derivatives are financial instruments that derive their value from the underlying assets. Derivatives are traded either over-the-counter or are exchange-traded. OTC traded derivatives are high in volume but are very risky because of a lack of regulations. Stocks, interest rates, bonds, and commodities are the most common underlying assets.

Derivatives Traders

Traders buy/sell the actual instruments, both over-the-counter as well as on the exchange. They make the market by making competitive bid quotes for clients who want to sell and offer quotes for clients who want to buy. To ensure liquidity in the market, they often hold an inventory of positions. They play an important role in profit-making for the company.

Job description:

  • Trading with researched, back-tested quantitative models.
  • Assessment of market movements using financial models for creating market and executing profitable trades.
  • Provide profitable trades and personalized solutions to the clients.
  • Considering all the relevant information to forecast market movements and take trading decisions accordingly.
  • Perform valuations and issuing relevant reports.
  • Communicating with the sales department and clients to unanimously take a trading decision, depending upon market movements and volatility.
  • Developing good relations with brokers and dealers to ensure the trades take place smoothly.

Derivatives Risk Analyst

Derivative risk analysts evaluate risk factors in trading decisions. They formulate several trade strategies to control risk. Through the application of quantitative and analytical skills, these analysts identify the risk of possible losses.

Job description:

  • Analyze economic and financial sector trends and recommend strategic plans to the management.
  • Conducting research to identify the degree of risk, drafting reports of the research results, and suggesting methods to mitigate the risk.
  • Ensuring compliance with all the regulations and maintaining the firm’s public image.
  • Conducting statistical analysis with the help of various software packages to ascertain the risk factors in the firm’s investments and helping the management with future investment decisions.

Derivatives Operations Analyst

This is one of the most critical trading jobs. These analysts provide support to the daily operations for derivatives and other products and provide post-trade support to the Derivatives dealing desk by ensuring executed trades are successfully captured, confirmed against the counterparty’s position, collateralized, and reported to the regulator. This involves internal operational processes as well as monitoring chosen outsourced middle and back-office provider to ensure desired service levels are followed. .

Job description:

  • Full operational support to derivatives and other financial instruments. Comply with policies, procedures, and controls for the protection of the company and clients.
  • Work with and build on existing relationships with Custodians, outsource providers, and third-party investment service providers.
  • Providing Investment Operations team with daily sign-off of swaps positions and valuation reports oversight.
  • Perform daily liquidity management processes. Ensuring accurate and timely information is available for the Portfolio Managers.
  • Review and improve all existing Derivative operations procedures and processes where there is scope for improvement in efficiency, opportunities to add value or reduce risk.
  • Assist the Compliance department in any internal and external audit processes. Oversight of all daily outsourced providers' routines to ensure the service levels are as expected.
  • Review cash and stock reconciliations to ensure accuracy. Manage operational reinsurance collateral process by daily monitoring and instructing collateral top-ups, if required.
  • Act in a technical advisory capacity when helping resolve failed trades between the Front Office traders and middle office providers.
  • To assist and take direction from the Senior Derivatives Operations Analyst and Head of Investment & Derivatives Operations in any other Derivatives Operations related tasks.
  • Manage team queries and ensure appropriate, high-quality, and prompt responses are provided.

Technical and behavioral requirements:

    Educational qualifications and other skills required for the roles:
  • Strong academic records with a master’s degree in business finance, mathematics, and statistics. MBA in finance from a top tier institute is a must in some roles.
  • Certifications such as CFA, FRM, CPA are highly preferred.
  • Working knowledge of programming languages.
  • Problem-solving approach with great quantitative aptitude and reasoning abilities.
  • Deriving useful insights from complex data.
  • Ability to prioritize multiple responsibilities to meet business deliverables.
  • Ability to build strong relationships with both internal and external clients.
  • Knowledge of fixed income and derivative products.
  • Ability to learn. Develop the operational, technical knowledge and skills to perform the role successfully on an on-going basis within a dynamic work environment.
  • Demonstrates proficiency in written and oral communication skills.
  • Experience in following business processes, standards, policies, and procedures.
  • A keen interest in the investment industry with an appetite for innovation and collaboration.

Who will you work for?

Large Investment banking firms like Goldman Sachs, Morgan Stanley, Merrill Lynch, etc., Rating agencies, Hedge funds and Pension funds, NBFCs, Big four (KPMG, PwC, Deloitte, E&Y), regional banks, and broker-dealer firms.