While the ranks of equity traders in investment banks have long been decimated by algorithms, and hundreds of prop traders have been forced out by regulation, corporate bond traders have remained relatively safe.
The interlinked argument is that corporate bonds are both too varied and complex, and too illiquid, and therefore the need for experienced and skilled traders to execute the deals over the phone has remained.
If the backers of the latest electronic bond trading start-up, TruMid Financial, are anything to go by, however, this won’t be the case for much longer.
“The days of a very skilled market maker that has the ability to set his or her own level of risk are over,” said Jeff Bahl, the former head of U.S. high yield credit trading at Goldman Sachs who is investing in the firm alongside Peter Thiel and George Soros. “The business of trading bonds at banks is now glorified order taking.”
This is high-profile backing for another bond trading platform that is facing stiff resistance from the current entrenched players on Wall Street. Many have failed – not least Goldman Sachs which its shelved GSessions bond trading platform last year.
Its creator, Chris White, told us previously that investment banks do not give new technology sufficient time to succeed: “Any nascent technology needs a gestation period, but investment banks are multi-billion dollar institutions which judge every innovation by the same standards as other business areas,” he said. “If it’s not making money quarter on quarter they can’t see the value, but you’re comparing new technology with a mature and profitable business model. It can be difficult to maintain face.”
Any challengers to this in the bond market need financial firepower.
Separately, in another argument that those on the trading floor (and elsewhere in finance) need to learn to code, there’s more evidence of its positive affect on your earning power. Of 665 people who completed a ‘coding bootcamp’ for an $11.8k fee between 2013-2015, salaries were boosted by an average of 38%. Still, average salaries were still a modest $68k and 21% were unemployed after taking the course – more than the 16% who didn’t have a job before they started.
Meanwhile:
Bad news for the City of London: HSBC has moved billions of dollars of derivatives trades to Hong Kong. (Reuters)
Credit Suisse hasn’t taken long to make good on its promise to hire more senior bankers – it’s hired five healthcare bankers from Barclays in the U.S. (Credit Suisse)
Barclays has looked internally for its new equities chief in Europe. Richard Evans, formerly COO for equities, has been given the job. (Financial News)
While Josef Ackermann waxes lyrical about the need to help “society at large” at his new role as chairman of Bank of Cyrus, John Hourican – the former RBS investment banker and current CEO – reminds him that his efforts are not appreciated everywhere. “They did burn my car,” he says. (New York Times)
Basketball to banking: “Playing competitive basketball taught me the importance of preparation, hard work and above all, teamwork.” (Business Insider)
J.P. Morgan will reveal any bonus clawbacks for senior executives (Reuters)
When ex-Goldman Sachs partners don’t work out: boutique investment bank Greenhill has lost managing director Luca Ferrari as well as three other senior bankers. (Financial News)
Fidelity is hiring an additional 600 technology professionals in its North Carolina operation. This will bring its headcount to over 4,200. (Charlotte Journal)
Goldman’s Gary Cohn is making a point of meeting tech start-ups whenever he is in San Francisco (Financial Times)
Looming EU regulation on equity research is likely to lead to yet more job losses in equity research, says Deloitte (Bloomberg)
The hedge fund manager who moonlights as a priest (or vice versa) has two rules: pray for the fund, and disregard short-term performance (WSJ)
Kate Middleton wears expensive dress to Women in Hedge Funds event (Daily Mail)
98 hours for $50 a week: what it takes to work for the Scientologists (Raw Story)
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