Morning Coffee: Fear strikes FX trading community. 'Simple and efficient' cost cutting at BNP Paribas seems insufficient

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Fear and Terror

Fear and terror in FX

It's Halloween. In London, FX traders are greeting the day with trepidation, wondering which of their number will be picked off next by unhinged investigators in grey suits.

The casualty list is growing fast. Roger Boehler and Niall O'Riordan, two of UBS's most senior FX traders, were dispensed with earlier. Two days ago, it emerged that Matt Gardiner, an ex-UBS FX trader who'd sought safety at Standard Chartered had been put on inexplicable leave. Today, it transpires that Richard Usher, chief dealer at JPMorgan in London, has also disappeared into the cellar, along with Rohan Ramchandani, his counterpart at Citi.

The investigation is still at early stages. Barclays is looking into possible trader transgressions. So is Deutsche. FX traders may feel inclined to stay in bed, clutching garlic and religious effigies. Unfortunately, this is unlikely to help much.

Separately, BNP Paribas results are out. The French bank has been indulging in the 'Simple and efficient' cost saving methods it announced earlier this year. No one knows exactly what these methods involve, but they are not thought to entail job cuts. Overall, BNP said it's only 25% of the way through the simple cost reduction programme. However, costs absorbed 82% of income in BNP's advisory and capital markets business (sales and trading and M&A) in the third quarter, up from 67% last year. If this continues, BNP will soon be compelled to ditch simple and efficient in favour of harsh and brutal.


How to avoid the bonus cap: if a trader currently receives about £2m ($3.2m) a year made up of £200k in base pay and a £1.8 million bonus, the new yearly package might consist of £200k in base pay, an £800k allowance and a £1m bonus. (WSJ) 

Bonuses for equity traders and investment bankers probably will rise, offset by a drop in pay for fixed-income traders. (Bloomberg)

Credit Suisse is cutting 65 fixed income jobs. Half are in rates. Half are in sales and trading. (Reuters) 

Simon Warshaw, former co-head of investment banking at UBS, will this week team up with Robertson Robey Associates.(FT)

Veteran Goldman equity researcher decides he’s better off in investor relations. (Bloomberg) 

Schadenfreude is a normal human response, researchers find. (Telegraph) 

No one ever says they want to be a private banker. (Bankers Umbrella)