Working for a brokerage firm in the Gulf has been something of a perilous affair for a couple of years now, but depressed trading volumes in the first quarter of 2011 have seen more firms shut up shop.

There are now just 65 brokerages operating in the UAE, compared with 103 at the beginning of 2010. Last week, regional investment bank Rasmala revealed that it was closing its retail brokerage operation along with a senior management shake-up with co-chief executive David Woods and Khaled Masri, its head of brokerage, departing.

Ali al Shihabi, Rasmala’s founder and chairman, said that the retail brokerage was too costly: “In terms of staff, operations and risk management exposes us to a heavy operational burden and high risk for a minimal return.”

Even the larger brokerage firms are struggling, though. Last week’s decision to slash bonus payments at EFG Hermes could largely be attributed to slumping brokerage revenues, while Shuaa Capital – the number two brokerage in the region – was AED2.6m in the red for this division in Q1, following an AED10.3m loss for 2010.

Not surprisingly, for those on the receiving end of redundancies, there are few options available.

“Vacancies in brokerage are few and far between, and until trading volumes pick up again we don’t see that situation changing,” says Martin McDermott, operations manager at recruiters Gulf Connexions. “If they have a good book of contacts there’s scope for moving into wealth management, but not many brokers have taken that option.”

Banking analysts agree that there needs to be a big, international quality listing to restore faith in the markets and spur investor appetite for regional stocks. Unfortunately, more Gulf firms are looking to list on international markets.

Last week, DP World revealed it was to list on the London Stock Exchange (LSE), which is making a concerted to woo more Middle Eastern companies.

Just $21.7m was raised by Middle Eastern companies in initial public offerings (IPOs) in the first quarter, according to figures from Ernst & Young.

The Emirates Securities and Commodities Authority (SCA) clearly believes that smaller brokerages will continue to struggle. At a meeting with representatives of brokerage firms in Abu Dhabi this month, it reiterated the need for more M&A activity in the sector.

Understandably, the brokerage firms were more concerned with cutting the fees paid to the SCA.