Nurhyati Mohd Moor,a senior oil trader at Freepoint Commodities, has written an opinion column in the FT on the age old subject of “can women prosper in the bro-culture of trading?”. But she also touches on an equally interesting question – why do women get pushed toward sales? Ms Moor notes that this has been a constant in the industry for quite a while. As an entrant to the industry, she had a mentor who “tried hard to steer me into sales”, and ten years later she finds herself talking to young women who have received the exact same advice.
There are all sorts of rationalisations given for this, often based on alleged necessary characteristics of sucessful traders which the amateur neuroscientists of the investment banking industry are able to confidently assert are found in one gender more than the other. After all, a trader needs to be an aggressive risk taker, but also obsessive about risk management and losing money. He needs to be logical and analytical, but also to follow a gut instinct and sense of the market. It’s an industry which appeals to aloof and obsessive nerds, but of course it’s a people business where relationships are vital. In actual fact, there are successful traders of all sorts of different personalities and styles, and the idea of an essential essence of traderness is usually an excuse for a decision that has already been made on other grounds.
And those other grounds are quite deeply psychological and sociological. In a securities business, the traders are the tip of the spear; everyone else contributes to the business, but the money is made when someone buys a security at one price, then sells it for a higher price. Whatever the formal hierarchy of the business, the traders are always a law unto themselves, because they are the ones who make the profits, and they know it. Even the most junior trader on the desk commands a certain degree of respect from even senior management in other functions; not least because the traders have the last word on price. And this is why there’s a lot more psychological resistance among male managers to putting a young woman into a junior trading role than into a junior sales one. It’s just a lot easier to think of a young woman fetching coffee and obediently laughing at clients’ jokes, than it is to think of her telling men much older than herself that the transaction they have been working on can’t be executed at the price they need.
This everyday sexism of markets businesses has been an irritation for ages, but looking forward, it’s much more of a tangible danger. The biggest result of MiFID 2 in Europe and worldwide has been to reduce the ability of investors to direct commissions, and without directed commissions, where is a salesperson’s revenue line? Generalist sales in both equities and fixed income is increasingly likely to be a career graveyard; an account management and customer-handling function which ends up looking more like overhead than part of the franchise. If it’s a career graveyard into which women have been disproportionately directed, that’s the makings of yet another scandal for the industry.
One trader who had all the right characteristics, until he didn’t, was Stephane Esper, formerly of SocGen. He was one of the 11 employees accused by the UK’s Serious Fraud Office of conspiring to rig Euribor back in 2015. Although the French courts refused to extradite him to face charges in London, SocGen appears to regard him as having chief responsibility for the $267m of fines that they had to pay to settle investigations into Euribor. They are not happy that he is suing them for $9m of compensation at an employment tribunal in France.
Esper’s case is a modern morality play about the relationship between a bank and an employee. His lawyer says that Stephane was working for SocGen, and the allegations made against him reflected his duties at the bank. Instead, they have cut him loose, identified him as the single bad apple and made him unemployable and under constant fear of arrest. The $9m (EUR8m lawsuit) covers the psychological harm caused by this, as well as lost earnings and an indemnity for the legal bills he will undoubtedly face if the UK criminal case against him proceeds.
For their part, SocGen say that they identified him as the bad apple because that’s what he was, that the fines they have paid are more than enough punishment for failure to supervise him, and that his demands are “extravagant”. The judge is set to decide in October.
In other extradition news, Stuart Scott, formerly of HSBC, has won his appeal against the Department of Justice, who wanted to try him in New York on charges of front-running a $3.5bn forex deal HSBC had agreed with Cairn Energy. This case had been watched closely by the FX community, as it was felt that the US authorities were pushing the envelope when it came to redefining common market practices (many of them agreed with the client) as criminal (Financial Times)
Perella Wasserstein is in a quite serious legal dispute with its former restructuring team, over the circumstances in which the team was fired and whether they were intending to start a new bank. This dispute has gone on for a while, and several of the companies involved might have hoped to have kept working with their restructuring bankers. However the legal agreement is with PW, and the bank has been aggressive in enforcing it, as well as the non compete parts of the team's contracts. (Financial Times)
Credit Suisse put in a fairly solid set of results for the second quarter, although they came in some more worse than expected in the trading divisions. Tidjane Thiam has been defending his bank against critics, noting that they won’t going to chase revenue if It means a higher capital requirement.(Yahoo, Bloomberg)
In contrast to the trading performance, capital markets and advisory were a bit of a bright spot for CS. That looks like it might continue into the second half of the year, as the pipeline for high yield debt issuance is full. Investors have been pushing back against some aggressive pricing, though. (Bloomberg)
After Goldman Sachs, the next big succession planning circus is Morgan Stanley after James Gorman. BI profiles the likely candidates, including international head Franck Petitgas, Ted Pick from the institutional securities franchise, and CFO Jonathan Pruzan. Possibly a sign of the times to see that the head of technology, Rob Rooney, is also in the frame. (Business Insider)
It’s interesting to note that two very similar banks with very similar problems, Barclays and Deutsche, have taken almost diametrically opposed approaches to the FICC flow monster business lines that put them up at peak before the crisis. Barclays is attempting to rebuild, what Deutsche is refusing to allocate any new capital to this area. They can't both be right, can they? (Global Capital)
Some advice for dealing with ingrates, credit stealers and other irritants, without looking too much like you are whining. A bit of passive aggression and use of email trails can work wonders (FT)
Picking rich parents is the highest probability way to end up rich yourself, but it's not necessarily the highest return. Jeff Bezos' mum and dad were the early stage venture capital in Amazon – it’s not publicly disclosed how much their initial $245,000 investment is worth now, but credible estimates put it not far off 30 billion dollars. (Bloomberg)
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