Trading Places: Hirings & Firings

by Paul Springer

Traders are playing musical chairs these days, and not always willingly. A grim economy, wavering trading profits and looming regulatory changes are breaking up big trading operations and battering bottom lines.

Credit Suisse Group is slashing its workforce by 4%, thanks to crummy trading profits and a beating from strength in the Swiss Franc. “Our strong track record of providing superior advice and services globally and attracting best in class people has been recognized by our clients and also through various industry awards,” the bank said a news statement on its financial performance.

But as Credit Suisse announced 2,000 layoffs, it did what it had to do, The Financial Times says: face reality. “UBS and Credit Suisse should be given credit for publicly acknowledging that far deeper pruning is needed in an industry that is struggling to adjust to tighter regulation and capital requirements as well as faltering economies,” the paper said.

In the U.S., the Goldman Sachs derivatives desk is “hemorrhaging” traders according to Reuters:

Goldman has been handing out promotions and better pay to its salespeople rather than the traders who manage the bank’s inventory of securities and derivatives, people familiar with the bank’s operations said.

Financial Group analyst David Hilder told Reuters that the pay situation is part of a scenario that puts a premium on client relationships. “You need sales people to deal with and talk to the clients,” Hilder said. “Over the long term, that’s more important than a few guys trading bonds.”

An unidentified source told Bloomberg that Israel Englander’s Millennium Management bit off a piece of Bank of America’s proprietary trading operation in the form of Linus Wright and his eight-person relative-value team:

Englander said in November that it was the best time in 15 years to hire traders as banks shuttered their proprietary-trading businesses to comply with U.S. financial legislation that bars them from trading with their own money.

Dodd-Frank legislation was one of the drivers behind the retirement of hedge legend George Soros, Bloomberg says.

In other news, MKP Capital Management co-founder Maurice “Chip” Perkins isn’t hiring or firing – he’s retiring. It isn’t clear what 53-year-old Perkins will do in retirement. But after running a $2 billion-plus credit fund that made 12% returns for years, he can do pretty much anything he wants.

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