US-based market making firm Knight Capital has announced that it will cut jobs and close its equities trading desk in Hong Kong due to the continuing deterioration of market conditions.
Knight has said it will cut 6% of its 1,465 global workforce, mainly from its full-service sales and trading teams in equities and fixed income, as well as in research, technology and support operations.
The firm has also said it will close its Hong Kong equities desk and discontinue its global program trading unit. Trading of Asian equities will now be handled by sales and trading teams in the US and London, with some institutional equities staff being reassigned. Knight’s Asia-based institutional fixed income and foreign exchange staff were not affected by the cuts.
The job losses and other cuts are expected to decrease annual operating expenses by US$40-50 million.
“For the past two and a half years, aside from a few brief periods, we’ve witnessed a prolonged deterioration in market conditions,” said Thomas M. Joyce, chairman and CEO, Knight Capital Group. “While we largely maintained our revenue momentum, overall financial performance lagged. In response, we focused the cuts on businesses and regions in which the competitive dynamics have shifted or the barriers simply proved too great. We will continue to seek further cuts in annual operating expenses as part of a broader expense management plan.”
Market conditions have forced a number of financial institutions to announce substantial headcount reductions in the last few weeks, with Credit Suisse, HSBC, Barclays Capital and ITG all reporting cutbacks.