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Traders not wanted at the FSA

The Financial Services Authority (FSA) is hiring 218 people for its supervisory team but, according to the Financial Times, it has little interest in hearing from ex-traders. Instead, what it wants are risk managers, product controllers and compliance officers.

On behalf of disenfranchised traders everywhere, we thought it right to investigate why the FSA is avoiding them. Surely, after all, a former trader with inside knowledge of what went wrong is just what the FSA needs for its supervisory team?

The regulator declined to comment. But Chris Rexworthy, a former member of the FSA’s senior management team and now a director at IMS Consulting, agrees that ex-traders have something to offer: “There’s always an argument that you need to have been in the business to spot the risks and find the wrongdoing.”

He adds: “You’d have thought it would be a good thing for some of the supervisory staff to have a trading background.”

Where are ex-traders going wrong then? Rexworthy thinks it might be because they tend to be too engrossed in trading technicalities. A director at one recruitment firm which works for the FSA confirms this to be true: “Unless they’ve worked across multiple desks, traders often have a narrow focus on one product. What the FSA needs is a broad understanding of banks’ whole organisation.

“People from risk, compliance, or product control backgrounds are more likely to have this,” the anonymous director adds.

Comments (11)

  1. Perhaps, but one of the skills that traders have is getting around the rules/guidances they been placed under and for the most part (but not always) staying on the righteous side of the law.

    Surely there is value in having cunning on your side.

  2. I don’t think any right minded ex-trader would want to work at the FSA anyway, there’s a wide gulf in mindset between the trading community and these people at FSA. Better to start your own business.

  3. Strange this but true. I think the mind set they are after is along the lines of a civil servant and someone who knows how to tick all their boxes internally.

  4. MaxBips: your logic would lead to hiring thieves and worst in police force; failed students as professors, etc. These smart masters of the universe can take care of themselves sans government employment surely.

  5. Is the FSA really likely to change?….they are so far behind the curve,,,the banks and market has had to regulate itself now and will no doubt behave for the next few years.

  6. Traders do not bring any unique skills to the job of policing trading. The analogy of hiring thieves to the police force is a good one. A police officer who has experience of watching and catching crooks has just more understanding of the underworld than most petty crooks. Similarly, an experienced risk manager or compliance officer has more of a clue than most traders how the system can be played.

    There may be an occasional criminal mastermind who has a unique way of smuggling drugs, etc., but they are very few and far between. 99% of criminals are common junkies and thugs with no unique tricks, just as 99% of traders have no unique ways of gaming the system (and no original trading strategies, some might say).

    Renegade cops with dark criminal histories but hearts of gold are a Hollywood fantasy. So is the concept of a trader able to turn his hand to policing trades.

  7. The FSA recruitment process has bogged down. I estimate the process from application to offer takes at least six months, if not more. Unfortunately, this looks like more of the same from the FSA, just more of the dullards we find so easy to fool ( 70 pages of powerpoint, overheated room ….. we’ve all done it). Why hire the people that missed the toxic products in the first place??? The FSA ain’t doing anything soon. Back to the good old days of being “grilled ” by some pimply faced new graduate from a big accounting firm representing the regulator …… money for old rope.

  8. Wizard of EC1 your comment is hilarious esp. the 70 of powerpoint overheated room and the like!!! But not clear they are fooled

  9. What about other ex investment bankers? not just traders but say structurers? would valuable skills in creating the products that arbitrage traders, rating agencies, tax and compliance regulations be useful to the FSA here? Not all bankers are wankers, some just want to be able to afford to live in london..

  10. I’ve been a trader, analyst and strategist. Traders are useless at thinking things through more than one step, and are definitely overpaid for what they do. But at least they can be ballsy and challenge accepted wisdom, this could make them more effective than some box-ticking compliance guy. I don’t think FSA civil servants or ex-traders will stop the frauds and cons that fall out the city.

  11. As an ex employee of the FSA the missing tool is the lack of commerciality and expereince that appointed supervisors have. Whilst understanding regulation and its policies there is little exposure to understanding the business processes and procedures which are implemented in firms to meet the FSA regulatory requirements. The FSA continue to move forward with a more principle base regulation of firms, this creates a bigger hole in working closely with firms as firms would be able to select their own procedures to meet the FSA objectives. This puts pressure on supervisors to require further knowledge and understanding of business procedures which fall outside of regulation whilst managing firms effectively. I personally feel its alittle too late to focus on resources!

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