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Now is not a good time to be an equity derivatives strategist, and when will Citi properly cut its bloated equities team?

Timed to take a knife to equities at Citi? (Photo credit: Wikipedia)

Timed to take a knife to equities at Citi? (Photo credit: Wikipedia)

After sweeping aside some of its London equity derivatives team earlier this year, Bank of America Merrill Lynch has been doing a little equity derivatives hiring. When we looked, it had brought on board both Sem Hamzaoui, an equity derivatives analyst from Nomura, and Akshay Sawhney, a corporate equity derivatives originator from Deutsche since July.

However, while corporate equity derivatives may be comparatively hot, the same can’t be said for other areas of equity derivatives. In particular, headhunters say many equity derivatives strategists are finding themselves surplus to requirements.

“All banks are cutting massively in equity derivatives strategy,” says one headhunter specialising in the area. “No one wants to pay for research and strategy any more. Only PnL roles are safe and even those are under huge pressure.”

Various senior strategists have moved recently – although their displacements may have been entirely voluntary. Yazid Sharaiha, former MD and global head of quantitative and derivative strategies at Morgan Stanley has resurfaced at Norges Investment Bank. Nicolas Mougeot, former MD and global head of equity derivatives strategy at Deutsche Bank has moved to hedge fund Kedge Capital.  There are unconfirmed rumours that Alex Ypsilanti, Hong Kong-based MD of quantitative and derivative strategies at Morgan Stanley, is also leaving. Meanwhile, Marcus Overhaus, who joined UBS from Deutsche as head of global equity structuring in January 2011, is said to be going on sabbatical.

Equities cuts at ING 

Away from equity derivatives, ING has become the latest bank to cut in equities. Reuters reported yesterday that the Dutch bank is closing its Central and Eastern European equities operations and closing its equities desk in Moscow. It’s also getting rid of 30 corporate financiers in London. As we reported, HSBC also cut in equities and equity derivatives last week.

Equities cuts at Citi?

However, headhunters say the real question is when and whether Citi will make some definitive cuts to its bloated equities business. Citi added 152 registered people to its London equities business between early 2009 and February 2012, increasing its size by 106%. Since that time, it’s trimmed 28 people but made no real impression upon the hiring bulge shown very clearly in the chart below.

Approved persons at Citigroup Global Markets UK equities business 

Source: IMAS

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