The outlook is bleak for Japan’s brokerage sector, but just what impact is the equities slump having on trading roles?
Nomura’s heavy second-quarter losses show that the global financial meltdown is hurting Japan’s brokers – despite their comparatively low exposure to asset-backed securities – because of sharp declines in the local stock market. (Financial Times)
Matt Anderson, manager of the banking and finance team at Legal Futures, says although some firms have adopted a proactive approach to hiring to take advantage of a glut in quality talent, most banks have applied the brakes to recruitment. “As risk management now takes precedence over profit making, the market readjustment over the past month has led to reduced demand for prop traders, and derivatives traders in particular, as firms try to shore up their balance sheets,” Anderson says.
Pete Millett, director of recruitment firm People Services International, says he has neither seen much new hiring, nor many traders being let go. Some firms are not in a position yet to wield the axe, Millett explains, because they have needed traders to unwind their current situation and will need them to maintain and update their positions to avoid further losses or to capitalise on short-term gain opportunities.
Anderson adds that market volatility has made it particularly hard for line managers to convince management of any immediate need to strengthen their trading staff. But he is confident that when the market shows signs of stability there will be significant interest in securing quality staff to take advantage of any rebound.
Guaranteed portions aside, Anderson says it is hard to see how bonus levels will compare to previous years. “At the very least, it seems plausible that the speed of any recovery will be very closely managed, and therefore it is entirely possible that everyone’s bottom line will be affected, and this includes not just bonuses but base salary also,” he says.
Millett also expects bonuses to fall, but he believes it is a case of banks not wanting to be seen as handing out generous rewards, rather than not being able to afford the payouts. “It’s as much psychological as anything,” he says.