Morning Coffee: Firing bankers in London is about to become a lot harder. Jane Street as a private equity firm

Once in a while, something unusual happens in London banks. A banker or trader who has been unfairly fired is given his or her job back. The bank doesn't really want to rehire them. The banker or trader doesn't really want the job, but by taking it, they can receive extra money to compensate for their unfair redundancy.

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This course of events is the result of the UK's cap on compensation for unfair dismissal. The maximum that an individual can receive for unfair dismissal following a successful case at a UK employment tribunal is currently set at £118k ($157k). If you're someone like David Fotheringhame, the former head of automated fixed income trading at Barclays, this probably doesn't sound like much. Therefore, when Fotheringhame was fired by Barclays in 2016, back when payment for unfair dismissal was capped at £83.7k, Fotheringhame simply demanded that the bank rehire him as a "data expert" on £149k. Ian Weir, a trader unfairly dismissed by Citi in 2021 attempted the same approach. 

The alternative to forcing a previous employer to rehire you has been claiming discrimination against a protected characteristic or maybe whistleblowing, both of which allow for unlimited payouts. 

Such shenanigans are about to disappear. The Financial Times reports that the UK government plans to allow unlimited compensation for unfair dismissal claims brought after six months of employment. The change will reportedly be added to the Employment Rights Bill, which is due in Parliament next week. The bill is expected to become law in 2026-2027.

Unfair dismissal occurs when strict procedures are not followed before laying off an employee. UK law, described here, states that there must be a "good reason" for dismissing someone and that a formal disciplinary process must be followed. It also states that dismissing someone who wants to work flexibly may be unfair.

After the new law is passed, then, people in financial services may be able to demand flexible working and then sue for unlimited compensation if they're fired as a result. Junior bankers and new hires who don't work out, will be able to demand unlimited compensation if they're let go after six months because they're not a good fit. Currently, unfair dismissal claims can only be brought after two years.

At the very least, the change to the law seems likely to bolster HR departments, whose processes will now need to be watertight. At the most, it's likely to seriously dissuade banks from hiring, particularly untested juniors. The good news is that London banks with cold feet can always recruit in Paris instead. - France has punitive laws on dismissing people but relaxed them to make it easier to fire high earners in 2017.

Separately, Jane Street is a bit like a private equity fund. Bloomberg reports that Jane Street invested in LLM developer Anthropic and that these investments in Anthropic juiced its third quarter trading revenues by $830m (and presumably contributed to its increased pay). 

Jane Street has long been known to engage in prop trading alongside mere market making, but now it seems to be acting like a private capital investor too. Bloomberg says Jane Street makes "strategic investments" through an unrestricted subsidiary, and these investments constitute about 7% of its trading capital.

Meanwhile...

Barclays promoted 118 MDs. 68 were in the investment bank. Last year, it promoted 116. (Bloomberg) 

Millennium's Index rebalancing strategy made significant losses last month. (Business Insider) 

76-year-old Brendan Nelson is perfect as HSBC chair because he audited banks during the financial crisis. Executives at RBS executives turned to him for advice when the RBS board was holding dozens of emergency meetings a year. (WSJ)

Brendon Nelson had been relaxing and doesn't want to be chairman of HSBC for the full term of six years. “I do recall he was working hard at his golf handicap, which he’d never had time for before. But he works hard at everything. I’d say his colleagues liked and trusted him for his knowledge and calm.” (Bloomberg) 

“Brendan is a good, capable pair of hands. But it isn’t the same tempo, he’s not going to be driving as hard as Mark [Tucker] was.” (Financial Times) 

KKR already has an office in Dubai, where it employs 20 people. Now it's opening one in Abu Dhabi. “Once we decide that we want to go into a region, we operate more like a switch than a dimmer.” (Bloomberg) 

Vanguard's Miami group is expected to grow to 15 people over the next five years from five currently. (Bloomberg) 

Jay Malavia, a 22-year-old computer science postgraduate at the University of Illinois at Urbana-Champaign, founded Kairos, a tool that helps traders in banks hedge using prediction markets. (Bloomberg) 

The machine learning skills that will get you a job at Tower Research: 'Apply modern methods responsibly, with awareness of overfitting and model risk.' (Tower) 

Law firms can't charge for billable hours when AI can do things in a second. (WSJ) 

Bankers in Manhattan have been trying to see Sydney Sweeney. (Instagram) 

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