It had all been going very well for people in Barclays' equities business. While the fixed income currencies and commodities (FICC) business is being hacked apart, cash equities is one of the areas Barclays wants to focus on. Yes, the bank's revenues in equities and prime services were down 6% year-on-year in the first quarter, but equities are clearly embedded in Barclays' plans for its core investment bank.
The scandal surrounding Barclays' dark pool doesn't change those plans, but it does make the bank's squeaky clean equities business look a bit smelly. It also has the potential to dent bonuses - especially in New York, where the scandal took place,
Yesterday's revelations that Barclays was secretly allowing predatory high frequency traders to lurk in its dark pool whilst rerouting customer orders there have been given more colour. Damningly, The Times says that Barclays prepared a large piece of analysis for a client in October 2013 which found that 88% of its trades were routed to the dark pool and that in 66% of cases the counterparty was a high frequency trading firm. A director preparing to meet the client with the report was ordered not to discuss this information. He refused and was dismissed the next day - before that client meeting took place.
Clients are already jumping out of Barclays' dark pool and at one point yesterday Barclays' shares were down 8% on the scandal. Chief executive Antony Jenkins has sent an email to staff saying that he's "deeply disappointed" and must get to the bottom of things. It seems very likely that Barclays will be fined. And it seems very likely that bonuses in Barclays' equities business will suffer as a result. Shareholders are still smarting at the recent Barclays' bonus hike - which was attributed to bankers trying to leave its U.S.business. Come the next bonus round, shareholders will expect employees at Barclays' investment bank to do penance. Now is not a good time to work in the bank's cash equities business after all.
Separately, why work as the chief investment officer of a hedge fund when you can produce esoteric artworks based upon mathematical equations. Bloomberg reports that 39 year-old Nelson Saiers, a former proprietary trader for Deutsche Bank and CIO at hedge fund Saiers Capital LLC is quitting to produce mathematically inspired paintings. You can see Saiers' work on his website here. “This body of work conveys my unique visual perspective and values, which are rooted in a special inclination toward mathematics as well as experiences that have shaped my views of good, evil, choice, and absolute truth,” says Saiers, messianically.
“Think of the position of shareholders. Every time Barclays gets sucked into another scandal we have to get the cheque book out.” (The Times)
In February 2014, Barclays was named ‘best dark pool’ by an industry publication. (Nanex)
“We spend a huge amount of energy now ensuring individual transactions are appropriate for our clients’ requirements,” said Craig Broderick chief risk officer at Goldman Sachs. (WSJ)
Senior bankers are leaving UBS in Asia. (Bloomberg)
Rates traders at Nomura have left for MKP Capital Management, a hedge fund. (Bloomberg)
Nomura boosted its CEO’s compensation by 80% last year. (Bloomberg)
If you get up early you’ll be less ethical at the end of the day when you’re a bit tired. (Inc)
Pay negotiation tips from the $35m Goldman Sachs trader. (Guardian)