After years of inactivity, the cash equities sector has seen a bout of hiring and defections. Recruiters put it down to a combination of opportunities and hard cash.
"In 2006, the cash equities market has seen significantly more movement than at any time for the past three years," says Simon Vaughan Edwards, a director at search firm Alexander Mann. "Banks have been comfortable with the way they've structured their equities models since the last downturn and have felt ready to hire again."
Significant moves in the sector include the exit of Alex Easton, former head of European equities at UBS, who retired in March. Deutsche Bank added two directors and a vice president to its U.S. cash equities business in April. Dresdner has seen a steady stream of traders from its cash equities business in May, some of whom have been picked up by JPMorgan, which has itself lost three senior equities bankers in the past month.
One cash equities recruiter says recent hires stem from banks repositioning their equities businesses in the strong markets at the start of this year. He says defections are due to stasis in the sector between 2002 and mid-2005, which made it hard for disgruntled staff to move on: "It's only in the last nine months that the market has picked up. People have been moving for packages that are 25 percent to 50 percent higher than they're currently earning."
Mark Shirley, an equities consultant at search firm Sheffield Haworth, says there are plenty of cash equities staff who haven't moved since 2001 or 2002. With divisions struggling under the combined burdens of falling margins, unbundling and growth in electronic trading, Vaughan Edwards believes people are increasingly choosy about where they move. "People want to move somewhere with a solid overall platform," he says. "A lot of banks cut down in equities during the downturn in 2002, and relatively few now have a compelling business in this area."
Key draws are a strong research product, a powerful sales team, an excellent trading platform, and a well-established electronic trading capability, he says.
Banks in this league are considered to include UBS, Morgan Stanley and Merrill Lynch. Firms such as Dresdner Kleinwort Wasserstein and ABN Amro are less alluring, recruiters say.
Recruiting activity in cash equities may yet prove a passing phase, as recent falls in global equity markets are expected to take their toll. "Business managers may take stock to see how things pan out," says Shirley. "Hiring programs that are in place might not be pursued quite as vigorously as they were previously."