Knight Eliminates 6% of Staff Amid ‘Deterioration’ in Market
Knight Capital Group Inc. (KCG) eliminated about 6 percent of its staff, or approximately 88 people, reducing sales and trading positions in equities and fixed income after trading business slowed.
The Jersey City, New Jersey-based securities firm eliminated or moved institutional equities employees in Hong Kong, and will handle trading in Asian equities through the U.S. and London, according to a statement today. There were no cuts in Asian fixed-income and foreign exchange. Jobs were reduced in research, technology, operations and other support roles.
“It’s not surprising when you look at the volume picture we’ve been dealing with in the last several months in the U.S. and other developed markets,” Justin Schack, managing director in charge of market structure analysis at Rosenblatt Securities Inc., said in a telephone interview. “It’s a reaction to lower activity levels in the market.”
U.S. equities volume averaged 7.5 billion shares in the first half of this year, down 21 percent from 9.5 billion shares in the same period last year and 31 percent from 10.8 billion in January through June of 2009.
‘Prolonged Deterioration’
“For the past two and a half years, aside from a few brief periods, we’ve witnessed a prolonged deterioration in market conditions,” Chairman and Chief Executive Officer Thomas M. Joyce said in the statement today. “In response, we focused the cuts on businesses and regions in which the competitive dynamics have shifted or the barriers simply proved too great.”
The reductions will reduce annual operating expenses by about $40 million to $50 million, Knight said. As of June 30, the company had 1,465 full-time employees.
Investment Technology Group Inc. (ITG) reduced its staff by about 100 last month because of lower institutional equity trading volume in the U.S. and Europe, Chief Financial Officer Steven Vigliotti said today in a conference call, according to a transcript.
The New York-based agency brokerage, which executes orders for customers and doesn’t engage in proprietary trading, has expanded into providing research directly to customers in the last year to give clients more reason to trade through the firm. Customers also typically pay more per share in commissions when they use research from a firm or bank.
Wall Street Layoffs
Weak trading revenue at banks this year will likely lead to layoffs on Wall Street, analysts including Meredith Whitney and Nomura Holdings Inc.’s Glenn Schorr have said. U.S. banks may accelerate announced job cuts after eliminating 11,400 positions in the first five months of the year, a 21 percent increase over 2010, John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., said in June.
Job cuts at financial firms are climbing after falling to a 14-year low of about 24,000 announced last year, according to data compiled by the Chicago-based company that advises companies on workplace reductions. This year’s reduction “might very well” be more than double 2010’s number, Challenger said.
“There are more public companies in the securities business than 10 or 20 years ago, so there’s more of a reaction to short-term trends and a need to rationalize your cost base because you have shareholders and analysts anticipating what your next quarter’s profit will be,” Schack said.
Firms will often lay off people to reduce expenses and hire more employees when business improves, he said.
“The trick is not to cut into the bone, so that when things rebound you’re able to capitalize on it,” Schack said.
To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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