Massive Layoff in Sales Trading Coming?
Looks like my Bloomberg terminal headline today is there will be a massive layoff in Goldman Sachs soon. Second time this year. Goldman Sachs already cut a lot of fixed income traders in past two years. Rumors say if volatility in rates and credit market won’t sustain in following years, then there will be a tremendous amount of layoff.
Have you heard anything about the bloody layoff in sales trading that goi to happen in next two years?
bump
with the success of WFH, many firms have found they can operate with reduced staff....and you know how banks love to save money
Are you also going to comment on the fact that S&T saw it's highest uptick in headcount in the last decade in the past 2 years or are we just going to focus on the "cuts". That's like saying oh wow this company missed earnings...after 2 record breaking years. Context matters. This is a cyclical industry. Cuts happen in S&T, IB, back office, middle office, everywhere, it's not just S&T. The fact that cuts have not yet happened during the worst pandemic in the last 100 years, and headcount actually grew during that time period in S&T, shows that banks value S&T staff handling high vol and being there for clients in times of stress. The reason I have this tone in my response is because you (if I am not mis-identifying you) post almost weekly with a doom and gloom outlook on S&T - when the vast majority of FICC (at the top shops) is doing great and has a bright future GIVEN that you are able to secure a seat. If you are on a good desk at a good bank, your odds of getting cut are very, very small unless you are very senior and just clipping bonus w/ little P&L.
Because, like you said, this message board loves to bash S&T in particular, and spread the fear porn associated with the industry. It’s funny because S&T still objectively pays much more on average than most jobs
Yep. Not even "most jobs" on the sell-side (assuming you aren't a star - which you shouldn't assume lol) - S&T (assuming good seat, bank within top 7/10 in the product) is prob the 2nd highest page on the sell-side, and with the caveat you are working 30h less a week - which, by the way is 4.25 HOURS A DAY. Think what you can do with that time and make like 70-80% of what IB does (until mid assoc at least).
Not necessarily true. If you look sales trading jobs addition, more quant and developer type of jobs instead of trading jobs. However, if you are a quant or developer, pay is not so good in a bank.
When bank talk layoff, they always start with expensive traders. Many desks no longer need prop type of traders so bank will try to automate it or replace the position with cheaper juniors.
Sales trading headcount likely to continue increase, but many of them are low pay quant and front office developers.
Traders headcount are declining, that’s a systematic change will last forever.
Don’t overlook senior quant and developers in your desk. Many of them are richer than you!!!
Do you know 10 years ago you can easily get paid more than half million as a quant or front office developers? They bought a lot of real estates, blue chip stocks at very low price, now many of them have a net worth of more than 10 million dollar!!!!
Much harder for younger people do it now. Tax is higher, cost of living is higher, less money is saved, blue chip stock is overvalued, real estate price didn’t go up recently.
I’d rather born 10 years earlier to work as a quant than being a trader now.
Good pointZ
Let me tell me a simple fact: there are significant amount of more dealers in corporate credit market 10 years ago. Much less dealers nowadays.
Not just credit. Everywhere you see less companies hiring nowadays.
People already start to forget about Lehman Brothers but Lehman Brothers hired a lot of people in the past.
Why the fuck are Investment Bankers up in here projecting their internal bullshit? Don't comment on what you don't know.
Uptick in hiring is temporary and markets revenues will return back to normal aka long term secular decline. Banks have been poaching strategic hires, so the net effect is zero as directors play musical chairs.
Banks have already given indications that there will be no bonuses this year, headcount is going to decrease b/c folks can work at home, potentially more regulation, increase on technology/digital spending, and getting ready to take cushion the loan book.
HSBC and Natwest have already gotten out of long dated products. This would have been unthinkable 10 years ago and the fact that they are global banks helping to facilitate the financial system's fundamental collateral/risk-free rate.
I'm in S&T, bud. Just haven't updated my handle. "There are going to be no bonuses this year" - you at Nomura or something? Literally everyone I know is expecting to cash out + Bloomberg literally drops an article a week on how FICC traders are going to see bonuses skyrocket this year.
"Revenues will return to normal" = long term decline? Some years revs are up, some are down, most are normally distributed - that's literally any business model that isn't high growth (finance isn't it's not 1980).
"Potentially more regulation" - is something that I hear every single year, banks adapt.
The fact that you are using HSBC and Natwest as examples though, when I said specifically in my reply, top 7/10 banks in any specific product, actually makes me regret typing up this response because either 1) you did not read what I had said or 2) you literally do not know what you are talking about.
Cheers
Lol. Bloomberg article don’t decide your bonus. The CEO try to save money to please shareholder are deciding your bonus.
I will say skyrocket bonus for management but not so much for lower rank workers. A net expenses cut looks good for a reason to hike management bonus.
As a trader, what other exit option do you have if your product is only traded in a few banks that all aim to cut expense to make shareholder happy?
Your two comments literally contradict. In the first, "When bank talk layoff, they always start with expensive traders" - you follow with - "The CEO try to save money to please shareholder are deciding your bonus. I will say skyrocket bonus for management but not so much for lower rank workers."
By that logic, how can a trader ever be "expensive" if they always cut to please shareholders? Further, if you are in a product that like 2-3 banks trade, that's not representative of S&T - that's representative of you choosing a product with high upside (exotics tend to pay a lot in good times) with high downside (few opportunities if shit hits the fan). That's literally rule #1 of finance, with high reward comes high risk. How the fuck did you get a job at a hedge fund? Jesus christ...
Bloomberg just released a big article on how BofA S&T bonuses are going to be flat despite record performance this year? How do you explain that?
see the recent BAML news? rip
also, if you work in S&T and don't understand how new regulations (esp. those on deriv transactions) have absolutely crushed PnL then you are not paying close enough attention. Banks are adapting by shafting their S&T businesses and focusing more on lending/deals. GS is the prime example. Went from #1 trading firm in history to starting a consumer lending arm and promoting a LevFin banker to CEO, which would have been extremely unlikely pre-2012 when most regulations had yet to be implemented.
Not to mention DB getting out of equities completely and UBS scaling back most of its product offerings. More and more banks will get out of certain products like equities completely as spreads shrink and tech takes over. Citadel Securities ain't helping the BBs either.
Interesting article on NatWest and HSBC pulling out of long dated IR swaps: https://www.ifre.com/story/2616303/rates-trading-consolidates-further-a…
Apparently the regulatory limitations on bank balance sheets post '08 is what is making this area particularly difficult to be cost effective. Also, obviously the current monetary situation is creating headaches.
I did see articles coming out that FICC S&T bonuses will likely be significantly up this year overall but certain banks may be different. NatWest and HSBC are really struggling in general as institutions right now. I think the biggest question is how will banks adapt their traditional business models to the current monetary environment. European banks are particularly weak because of the monetary environment there which I imagine is hurting industries like S&T where those banks used to be major players. Also, when will the current monetary environment eventually change to something more favorable to that traditional business model.
Only top 5 will survive rest will die
This post is legit fake news. FICC Trader here - just got a 25% comp increase, 100k worth of stock, AND bonus most likely 100-125k on top. I’m a senior associate, my entire division got similar compensation based off of title. FICC traders are fucking rolling in the money this year, if you are a performer they will BEG you with fists full of money to stay. I’ve never seen shit like this before, CEO legit put out a memo stating they are doing everything they can comp wise to retain us
curious - are the salespeople paid well too? or just trading
How did you get this before Q4 results are released? All the BBs don't pay out until mid January-March of the following year.
FICC will be getting paid this year across the board on average.
FICC got shafted the last three years.
The number one determinant for bonus payout in the FICC space is price volatility. Second, is liquidity, Third is credit.
Give most "good" traders, volatility, liquidity and credit room, and they can make a lot. Take away one of them and they can still make money, but not as much. After that it is pretty much game over.
Look, there will always be traders and sales. No algo is going to trade cocoa options or structured credit better than a human. IBM? Absolutely. liquid FX. Sure.
True. There are good years and bad years in trading.
Good years traders will take home a lot. But will bank lay off traders in bad years?
Of course
Is now a good time to join cash equities sales?
Seems like an interesting role to me!
If there is indeed a layoff coming, do you think if it will happen before or after bonus?
is cash equities a good spot to start post automation?
not unless you a full-blown quant
not even as a trader? like one of the few on the desk?
what about electronic trading?
My sense is that there will be layoffs around Feb. The recent uptick in S&T is solely due to massive vol swings which are short-term. the long-term trends will continue to reduce S&T headcount - it is inevitable.
I am hoping to start my career in Fixed Income S&T. Am I doomed?
not doomed but you would be starting your career in a declining industry. it would be like starting your own copying business in 2005 during the advent of pdf and online file sharing
Overconfidence in thinking you know everything is one of the worst traits in a first year analyst, Ell
lol that's a terrible analogy even if you think s&t is declining
That's kind of scary as I am entering the field of trading soon.
lol you're fine, 50% of the kids posting about S&T here probably haven't even been on a trading floor
I appreciate the feedback!
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