Investment banks let go staff across the board, but the cuts in derivatives were deepest in Asia as firms moved to eliminate duplication. Next year headhunters and staffers expect to see derivatives houses' centralizing their trading operations to reduce back-office headcount, a trend that started last year. In fact, in 2002 some firms, such as Bank of America, closed down whole operations, while others, such as Goldman Sachs, centralized all their traders in one Asian location.
BofA's decision to close its equity derivatives desk was a direct result of worsening conditions in the equity markets, Yaz Aiuchi, president of Banc of America Securities Japan in Tokyo, told DW in March (DW, 3/31). The move surprised many players as the firm only established the operation in 2000. Jim Clark, managing director and head of equity trading at UBS Warburg in Tokyo, said the equity derivatives markets were especially badly hit because the Nikkei 225 fell to 19-year lows.
The move to centralize trading was most widely felt in the fixed income markets, but some firms, including Barclays Capital Asia, put their Asian equity teams into one office in Tokyo (DW, 10/13). Goldman Sachs began preparations to move its Hong Kong-based credit derivatives team to Japan (DW, 10/27) while Credit Suisse First Boston relocated its credit traders from Singapore to Hong Kong (DW, 11/17) and ING Barings plans to centralize Asian fixed income trading in Singapore from Hong Kong. "Having duplicate locations is a luxury that can't be paid for anymore," said Mark Pink, financial recruiter at TMJ NetSearch in Tokyo.
It was not all one-way traffic. ING Financial Markets (DW, 5/26) and Bank of China International (DW, 2/3) launched equity derivatives businesses in Hong Kong. One headhunter said second tier firms and new entrants have used the layoffs from major investment banks to hire talent to which they would not normally have access.
Also, new markets, such as Taiwan and Korea, where deregulation caused market growth to outpace the worsening economic conditions, saw hiring sprees (DW, 9/22).
