Nomura Securities is shutting down its futures trading operation in Chicago, two months after exiting the residential mortgage-backed securities business and disbanding a structured finance research group in New York.
The latest cutbacks, reported in Wednesday's Financial Times, follow large losses from mortgage bond trading stemming from exposure to the sub-prime mortgage market.
The moves are part of a broader reorganization in which the Japanese brokerage firm is focusing its U.S. business on equities, asset management, and investment banking. "The group has indicated that, rather than try to compete with the global companies in a wide range of businesses, it will focus on being a global broker for Japanese and Asian products," the FT says.
Nomura reportedly lost 37.2 billion yen ($316.2 million based on the March 31 exchange rate) in the U.S. last year and 34.3 billion yen ($278.5 million based on the June 30 exchange rate) in its first quarter this year, primarily from fixed-income. In July the firm took a 70 billion yen ($568.4 million based on the June 30 exchange rate) write-down for its U.S. operations, and said it would pull out of the U.S. residential MBS business.
On Aug. 1, Credit Magazine reported that Nomura Securities laid the off three remaining members of its New York-based structured finance research division and transferred two others. That article said Nomura's U.S. subsidiary had previously forced out Donald MacKinnon, the managing director who headed mortgage-bond origination, and Brett Marvin, head of ABS trading.
Back in May 2006 - after the housing boom had peaked -- Nomura shifted the focus of its U.S. commercial and residential mortgage operations from securities trading to mortgage origination. The company formed a new Mortgage Finance division headed by MacKinnon, who joined Nomura in 2004. The company later said the unit would have a balance sheet exceeding $10 billion. At the same time, however, Nomura got out of the business of trading agency-backed mortgage securities.