Few firms are hiring equities traders in numbers these days, according to two headhunters. And until volumes pick up, and regulators provide a clearer picture for pending market structure changes, few will.
The combination of low volumes and regulatory uncertainty has daunted brokerages and institutions from hiring new traders, said Alan Guarino, a senior client partner at Korn/Ferry, an executive recruiting firm. One bright spot, though, has been a lasting demand for experts in mathematics, science and computers.
"Equities are in crisis," Guarino said. "Volumes are down. Obviously, budgets are not being met. And there’s a lot of cynicism that volumes aren’t coming back anytime soon."
The current threat of regulations is holding everything up, he added. No firm is willing to embark on any new initiative without knowing what changes in market will be going forward.
And the options markets hiring outlook doesn’t look any more promising. "With equities derivatives, [it’s a] similar situation," Guarino added.
Some firms have been hiring in dribs and drabs. The level of interest, though, doesn’t approach that of 2009 during the same time period, according to Michael Karp, chief executive of Options Group, a New York-based global executive search and consulting firm.
The picture has been grim. Business began to slow on equities desks roughly midway through 2009, after a strong start of the year.
This summer was particularly light, industry pros say. Equity markets in the United States suffered greater than 20 percent declines in August and September compared to a year ago, according to the Equity Research Desk in Greenwich, Conn.
For the past six months, many institutional money managers have shed domestic equities from their portfolios; the May 6 "flash crash" also dampened investors’ interests in equities.
As a result, commissions have been down. And firms have been casting people away. There have been hefty job cuts reported at Bank of America Merrill Lynch, D.E. Shaw and Knight Capital Group.
One recent forecast by analyst Meredith Whitney, of Meredith Whitney Advisory Group LLC, painted a particularly dark picture. It holds that securities firms around the world will slash up to 80,000 jobs over the next 18 months.
For his part, Guarino said he doesn’t see anything dramatic happening with hiring in either equities or options until the mid-term elections are over and the regulatory environment stabilizes. But firms have mostly finished making their large staffing cuts, he added.
"The firing is, for the most part, over, relative to what we’ve already done," Guarino said. "Episodically, you’ll see that happening, but I think we’re done, for the most part, purging."
Still, candidates looking to change firms who carry advanced degrees in mathematics and computer science have better chances than most, Guarino and Karp said. This has been the fact for a number of years. As the markets have become increasingly electronic, mastering the tools of business has been crucial.
"There’s a really good opportunity there, because if you think about it, the math is the next phase," Guarino said. "We’ve got the same technology. We know where all the liquidity is, and how to get to it. Now, we need to get to it faster and better, and there’s where the math comes in."
By and large, firms always want to hire "superstar" alpha generators, Karp added. "There’s no mass hiring going on," he said. "So as a recruiter, you find the next best guy who can deliver alpha."
In a story to be published tomorrow in TMWeekly, Alan Guarino and Michael Karp will offer their thoughts on the skills that traders will need going forward.
