Charlie Stenger, a currency-broker-turned-recruiter, has seen everything. One fired trader wept in the office. Another admitted he hadn’t told his wife he was unemployed, and left the home every single day inside a suit to sneak off and away to an espresso shop. Then there are the delusional guys, who carefully let you know that they’re not interested in jobs that don’t pay as well as those they just lost.
Stenger, who had been let go from ICAP Plc in 2013 and today works for Sheffield Haworth Ltd., tells the boys and women he counsels: Take the pay cut. Oh, and do not wait for the phone to ring.
“This is crunch time – it’s not looking great,” Stenger said. “This is really a shrinking pond.”
The investment banking business has shed thousands of positions because the end from the financial crisis, and also the downsizing continues to be difficult on foreign-exchange desks at a lot of lenders, including Morgan Stanley, Barclays Plc and Societe Generale SA. The industry-wide job-axing sweep coincided with a shift to automation, which slashed staffing needs and spawned a new, and small, generation of quantitative traders whose decisions are impelled by mathematical models.
There were 2,300 people employed in currency-market front-office jobs at the world’s biggest banks in 2014, a 23 percent drop from four years earlier, based on Coalition Development Ltd., an analytics firm.
The layoffs have continued and therefore are unlikely to stop in the US$5.3 trillion-a-day market. Revenue from from foreign-exchange divisions hasn’t bounced back after falling to US$6.5 billion in 2014, down almost 45 per cent from 2009, Coalition data show. Currency trading in the U.K. and North America shrank by a lot more than 20 per cent in October from the year earlier, based on central banks in those regions. London is the biggest centre for foreign-exchange trading.
This is crunch time – it’s not looking great.This can be a shrinking pond
“The business has to be downsized,” said Keith Underwood, a foreign-exchange consultant who ended a 25-year trading career, including at Lloyds Banking Group Plc, in 2014. But it is difficult “for those who have been in an industry for many, many years to see that they’ve been substituted with an algorithm.”
Humans face formidable opponents across the industry. Take Virtu Financial Inc. Deploying sophisticated technology in the industry, the business’s computers can trade a lot more than 11,000 securities along with other products on a lot more than 225 trading platforms in 35 countries. Because automation is really deeply ingrained in the business, it had no more than 150 employees this past year – generating a lot more than US$5 million per worker.
From his office at Sheffield Haworth in Chicago, Stenger doles out advice to friends still on foreign-exchange sales and trading desks. First, prepare to become laid off. Whenever you look for work, intend on having to have a 25-per cent reduction in pay. “Your stock falls once you lose your job, and that’s only the nature from the beast,” said Stenger, whose clients typically earn annual salaries of $250,000 to $1 million.
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Transferable Skills
Some ex-traders has progressed to smaller houses or pulled kids out of private school. Those waiting for the ax to fall hoard paychecks. Stenger was from regular work for annually after he lost his job; he was told about the lay-off four days after he learned his wife was pregnant using their first child. “There were periods where I wouldn’t earn money for 90 days at any given time,” he said, “and the insurance bill was still being due every month, and the rent and also the car payments.”
Underwood, the consultant, said he left the marketplace because regulators were cracking down on his niche by implementing stricter derivatives rules after the economic crisis. “My style of trading went out of vogue,” he explained. So the former head of forex trading for the Americas at Lloyds, who also led teams at Credit Agricole SA and Lehman Brothers working in london and Ny, reinvented himself.
In Control
“I couldn’t be more happy,” said Underwood, who described the hourly rates he charges as similar to those of a senior lawyer. “There is more empowerment, with charge of my future.”
Many traders have discovered they have transferable skills. Some have landed work as salespeople or executives at financial technology companies, payment providers or trading platforms and exchanges. Other medication is utilizing their knowledge to bolster banks’ risk-management operations. Franz Gutwenger, a recruiter in Ny, said one of his financial-institution clients has expanded its regulatory-compliance staffing by a factor of 5.
“I don’t think there is a whole lot from my generation which are still in the industry,” said Guy Piserchia, who throughout a three-decade career led North-American foreign-exchange trading at Bank of America Corp. and Paribas, a precursor to BNP Paribas SA, in Asia. He left Wall Street this year being mayor from the 8,700-person township of Long Hill, New Jersey. Now he’s deputy mayor, but said he wants to get back in to the business inside a role that combines his financial and government experience.
“With automation and electronic dealing, I think there are going to be fewer people” on foreign-exchange desks, Piserchia said. “The ones that have evolved and survived might be a few of the better ones – or, as in life, might be some of the lucky ones.”
-With assistance from Rachel Evans and Michael J. Moore.
Bloomberg News
