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Morning Coffee: What middle-class 32-year-olds do when they leave banking now. Time for Nomura to cut London traders?

Bitcoin, BitMEX, cryptocurrencies, cryptocurrency, blockchain, Deutsche Bank, Citi, Nomura, trading, traders, investment bankers, investment banking, investment banks, Wall Street, the City, careers, jobs

It used to be all about the Benjamins, but now it's all about the Bitcoin

People leaving traditional financial services for cryptocurrency startups is becoming more common, but no one has a career arc quite like former Deutsche Bank and Citi trader Arthur Hayes.

Hayes grew up a middle-class boy – both of his parents worked at General Motors in Buffalo – who really wanted to work in banking. He got into the University of Pennsylvania’s Wharton School and landed a summer internship at Deutsche Bank in Hong Kong and genuinely enjoyed the lifestyle, according to Bloomberg.

Hayes got an offer to join that office after he graduated. jetted off to London to attend Deutsche Bank’s graduate program. Despite the subprime mortgage meltdown that summer, Hayes and dozens of other trainees had the time of their lives. The bank put them up in luxe suites in London’s financial district. After they made it through six-hour finance classes, they painted the town red at pubs and dance clubs. Hayes told Bloomberg about an occasion when one trainee got so drunk he broke a rib throwing up.

Hayes moved to Hong Kong raring to go. However, during his first week as a full-time employee making markets in exchange-traded funds, Lehman Brothers filed for bankruptcy, sending his and many others’ career off-track. Deutsche Bank slashed bonuses and reorganized its trading desks to rein in risk and comply with new capital restrictions. Hayes earned 30%-to-50% less than he’d expected when he signed on. Eventually, he jumped to Citi, but the situation there was no better and he ended up getting laid off.

Hayes pivoted to his Plan B – Bitcoin – at the perfect moment, initially trading it himself. Now 32 years old, he is the co-founder and CEO of BitMEX, a Hong Kong-based cryptocurrency exchange that serves up cryptoderivatives – futures contracts that let investors make leveraged bets of up to 100-to-1 on the direction of 11 digital currencies.

Hayes’s firm brought in $83m in revenue last year and more than $21m last month alone, Bloomberg reported. It thrives on volatility and makes money whether Bitcoin goes up or down, and Hayes says there’s a lot more excitement compared to the current state of the banking industry.

But what if the crypto world isn’t your scene? How about becoming a sought-after computer programmer?

Boris Paillard, an ex-HSBC trader who quit his job creating equity and rates models to learn to code, is persuading his former colleagues to follow in his footsteps, according to Bloomberg. He co-founded Le Wagon, a nine-week bootcamp that teaches bankers, consultants and marketers how to make computer code for the cost of $8k.

Separately, Nomura is doing just fine in its home market of Japan, but City traders beware: Its wholesale banking revenues in London were down 46% year-on-year.

Overall, profits at Nomura’s wholesale banking business, which investment banking and sales and trading divisions, sank 70% to ¥14bn ($127.7m) in the most recent quarter, dragged down by revenues that fell 16% to ¥165.6bn ($1.51bn).

Nomura’s much-larger markets business experienced a 32% year-on-year drop in fixed income revenues to ¥79.4bn ($720m), blaming low volatility, which counteracted a 9% increase in equities revenues, according to Financial News.

Nomura suffered double-digit-percentage drops in year-on-year wholesale revenues across both the Americas, where it recently hired 15 senior investment bankers. At least this wasn’t as bad as in Europe.

Meanwhile:

An African-American man from New Jersey who worked as an assistant vice president at Morgan Stanley until he was fired in August 2016 filed a lawsuit citing a “campaign of harassment” and discriminatory policies and practices. (Bloomberg)

Goldman Sachs is setting the bar very high and putting a lot of pressure on its commodities traders. (MarketWatch)

A former sales-trader at Instinet and Bank of America Merrill Lynch has joined “Flash Boys” exchange IEX, an upstart rival to NYSE and Nasdaq. (Business Insider)

Bank of New York Mellon and State Street stand to benefit most as U.S. regulators prepare to ease a key leverage rule and thus could be looking to ramp up recruitment in the near future. (Bloomberg)

Hedge fund billionaire Steve Cohen is on the comeback trail, but he has a lot to prove. (Bloomberg)

Greg Coffey’s new fund Kirkoswald Capital Partners will launch soon with $1bn, and he’s been hiring. (Business Insider)

Izzy Englander’s Millennium Management hired Hariharan Sairaman from Arrowgrass Capital Partners as a portfolio manager in its New York office. (HFMWeek)

Blackstone Group’s fourth-quarter results a rising economic profit, reflecting changes in the value of unrealized investments, which surged to $850.4m. (WSJ)

The “maniacal” and “obsessive” global chief investment officer for fixed income at BlackRock is also zealous about education reform. (Bloomberg)

Physicists at the U.K.’s national lab have invented a unified measurement system for high-speed transactions and are now “selling time” to traders. (FT)

The North American Bitcoin Conference hosted a networking party in a 20,000-square-foot Miami strip club known for aerial acrobats and a permissive attitude toward touching female employees. (Bloomberg)

Even “famously sexist” Wall Street employs a higher percentage of women than Silicon Valley – in both industries, only a quarter of leadership roles are occupied by women, but at the top banks half of all employees are women, compared with a third at big tech companies. (Bloomberg)


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