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Morning Coffee: These hot tiny trading firms hire from Silicon Valley, not Wall Street. Deutsche’s big freeze

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Traders, beware: AI algorithms are coming for your jobs.

XTX Markets is one of the fastest-growing trading firms in the world, but it doesn’t have any human traders. Instead, it is hiring mathematicians and programmers to write trading algorithms and trading analysts to monitor them.

The tiny market-maker, which employs less than 100 people, is eating big banks’ market share in foreign-exchange (FX) trading, having broken into the top five worldwide earlier this year. And now that it’s dominating the currencies space, it is positioning itself to expand by tackling the equities, commodities and fixed income markets.

“The parts of the banks’ trading business that have become less profitable since the financial crisis is where the principal trading firms are stepping in,” said Kevin McPartland, head of research for market structure and technology at Greenwich Associates, as reported by Bloomberg.

While XTX does hire people from banks, its primary recruitment focus is luring talent from tech behemoths such as Google and Facebook.

XTX’s co-CEO Zar Amrolia has a Ph.D. in mathematics from the University of Oxford, is a former partner, managing director and co-head of foreign exchange at Goldman Sachs and the ex-global head of foreign exchange and co-head of FICC at Deutsche Bank. He is looking to hire others like him with “extreme quantitative skills and a good understanding of technology,” so – in addition to in-office foosball tables, PlayStations and other Silicon Valley-style perks – XTX gives most employees equity in the company. Game on.

Separately, facing steep regulatory fines and/or settlements, Deutsche Bank has made the announcement that many have been expecting for some time: CEO John Cryan has imposed a company-wide hiring freeze – which could save the bank more than $2bn this year – as part of his plan to cut costs and boost investor morale.

After announcing plans to cut 1,000 jobs last week, DB execs should not expect eye-popping bonuses – Cryan has publicly said that “nobody has unrealistic expectations.”

While times are tough, at least Deutsche Bank isn’t alone. Many European banks have also been focused on cost-cutting, and Barclays instituted a hiring freeze of its own last year, which has resulted in a headcount reduction of close to 14k.

Meanwhile:

Finally, Credit Suisse’s Tidjane Thiam has received some good news, as the investment banking division’s outlook has begun to brighten a bit. (FT)

Wells Fargo CEO John Stumpf botched crisis management 101: He was slow to respond to outrage over employee misdeeds, stonewalled U.S. senators and seriously irritated the Sage of Omaha, Warren Buffett, who happens to be the bank’s top shareholder. (WSJ)

Analysts are happy with Stumpf’s decision to retire from his position as chairman/CEO of Wells Fargo. Lawmakers? Not so much. One Senator demanded that he give back “every nickel he made while this scam was going on.” (Bloomberg)

As Stumpf attempts to ride off into the sunset, it’s important to remember that the Wells Fargo scandal isn’t dead yet…far from it. (Business Insider)

Snapchat’s parent company Snap tapped Morgan Stanley and Goldman Sachs to be the lead banks for its initial public offering of stock – the same two banks that worked on Alibaba’s record-setting $25bn IPO. (New York Times)

Traders who rely on market-timing for your success: Consider yourself warned. (Bloomberg)

A bomb threat forced hedge fund giant Bridgewater Associates to evacuate its Connecticut office. (WSJ)

Now YOU can borrow money from Goldman Sachs. Yes, even you. Well, if you received a letter with a special code in the mail, that is. (New York Times)

The most successful IPO of the year actually has a red flag attached to it. (Bloomberg)

France’s finance minister is telling banks to come to terms with the inevitable and start moving jobs from London to Paris. (Reuters)

Frankfurt is countering with a Brexit-inspired marketing campaign of its own with the following tagline: “A place for bankers, hipsters and for you.” (Twitter)

UBS hired Darren Novak, formerly a managing director at Houlihan Lokey, in its New York office to advise companies on how to defend themselves against activist investors. (Reuters)

Deutsche Bank has hired Mohamed Atmani as the head of its financial sponsors coverage in Asia-Pacific from UBS. (Reuters)

The Financial Conduct Authority asked the Supreme Court to overturn a ruling that it failed to properly hide the identity of Achilles Macris, the former JPMorgan Chase manager of the London Whale trader. (Bloomberg)

“The real scandal here is that bankers paid thousands of dollars for Hillary Clinton’s movie reviews.” (YouTube)

Here’s how to ask for a pay raise in order to maximize your chances of actually getting it. (FT)

Photo credit: iLexx/GettyImages

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