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Derivatives bull shows its horns

A bull market is raging for Hong Kong derivatives hires.

Earlier this month Lehman said much of its 2007 budget would be focused on building its derivatives and structured notes businesses in Asia. Headhunters say it's not the only game in town: UBS, Deutsche Bank, HSBC, Goldman Sachs and Morgan Stanley are all hunting for derivatives expertise, too.

According to one headhunter, remuneration for derivatives staff in Hong Kong is up 15-20% across the board this year, with some people being poached on guaranteed bonuses 50% higher than their most recent payouts.

Product placement specialists (sales people) are top of the hiring heap, particularly those familiar with exotic products, where margins are highest. Interest rate expertise is equally sought after, following the global hiatus in rate rises since earlier this year.

Sales people are required to be increasingly technical due both to the nature of the product and a more sophisticated and better-informed client base, warns Mark Jones at the Laurus Group in Hong Kong.

Jones estimates that given the small talent pool in Hong Kong, banks will increasingly look to import talent from Europe and the US.

"The French banks, such as SG, BNP Paribas and Calyon, are exceptionally good at derivative products," he says.

International banks in Asia have sizeable derivatives trading operations in Tokyo, but transferring sales people to Hong Kong often means they will be lacking in local client contacts, says Jones.

In US dollar terms, recruiters say a first-year associate HK derivatives salesperson can now command a total package of $200k to $225k. Vice presidents are reportedly on track for $500k to $600k. And senior people can command a hefty $800k to $1.4m.

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