Electronic trading divisions at a number of large investment banks are struggling to escape the knife, which is being wielded firm-wide as market volatility pulls sell-side firms in opposite directions.
A number of bulge brackets are making cuts across the board, says one market observer, “even where they need to be demonstrating robustness and resilience.” Some of the latecomers to algorithmic trading are reported to be reconsidering their position, DKW being the first to go public in mid-January with cuts at the top.
At the same time, some technology-based agency firms are achieving new peak levels of business. “Yesterday was a record high for us beating the previous record high of the day before,” says Joe Wald, managing director, Knight Equity Markets and founder of EdgeTrade. Initial estimates of the exposure of major firms to vulnerable assets – a driver of the personnel cutbacks – were clearly unrealistic, says Wald. “Once again, people convinced themselves that by killing the first cockroach that crawled out from behind the fridge, they’d dealt with the problem,” he comments.