Soft commission rules hit smaller brokers

Now may not be the best time to up sticks and head for a small UK stockbroking firm. The sector is said to be struggling under the FSA's new rules on soft commissions.

Institutional investors are increasingly placing orders through a small group of top brokers ahead of the Financial Services Authority's ban on soft commissions, according to the Financial Times.

The ban is set to come into force next month. The FT argues the reduction in commission revenues is set to prompt consolidation in the small brokerage sector.

Ray Soudah, founder of Millenium Associates, a Swiss-based corporate finance boutique focused on the asset management, securities and wealth management industry, says consolidation is likely to spell job cuts: "In any merger, there is restructuring."

He points to Williams de Broe, the London- based stockbroker owned by Dutch bank ING, which is being courted by mid-cap rival Evolution Plc. There have been suggestions that back office jobs could be cut following a union.

Soudah says the move to consolidate is unlikely to deflect the formation of other mid-cap brokerage firms, but he advises would-be employees to check their credentials carefully. The best ones to work for have strong founding partners who have brought clients with them, says Soudah.

Separately, he says Millenium Associates is itself opportunistically recruiting seasoned corporate financiers with at least five years' financial services industry experience. Entrepreneurial types are preferred.