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. Last Updated: 07/27/2016

Brokers Face Chopping Block




Some are playing computer games. Others have their feet up and are telling colleagues lengthy anecdotes from their childhoods. Still others have found time to call home and talk to mom.


But for all the extracurricular activity in Moscow's brokerage houses Tuesday, very few people could be said to be trading. "We're keeping up with events and answering customers' questions," said Eugene Kogan, a trader at CentreInvest.


With the once huge treasury-bill market now frozen, fixed-income business is all but dead. If it doesn't pick up, many traders could face the ax.


They would join a growing mass of Russian stockbrokers who have been laid off over the past year. As volumes on stock and debt markets have dwindled, brokerages have slashed staff to cut costs.


"About 90 percent of all companies are currently reducing their staffs," said Andrei Galperin, Rinaco-Plus director of client relations.


Many investment companies have laid off from 20 percent to 50 percent of their employees, said Olga Selivanova, a partner at the Morgan Hunt recruiting company.


CentreInvest has cut its staff by about 15 percent and may be looking for more trims, said Alexandre Babian, head of asset management.


"We are not profitable under these circumstances, and anyone who tells you they are would be a liar," Babian said.


The collapse of the T-bill market is only the last straw. Equity trading volumes have been low all summer. Tuesday's volumes on the Moscow Times Index of 50 leading shares were a scant $13.78 million, compared to more than $100 million a year ago.


The lean turnover led to a decision by Brunswick-Warburg investment house last week to let go of some 80 people, one-third of its work force. About 10 percent of those employees were expatriates.


This year, Austrian investment bank CAIB in Moscow laid off 20 percent of its employees, the bulk of whom were traders, and PREMA company fired 70 people, or 20 percent of its staff.


MFK Renaissance downsized in January when its chief, Boris Jordan, fired about 400 from the staff of 850 and then hired 250 new employees.


"When the crisis started, I realized that if I did not cut my costs, it would be bad," Jordan was quoted by the Kommersant Daily newspaper as saying this month. "My costs are now at their lowest levels in the four years we have been operating."


Already this summer one brokerage -- G.A. Finance -- folded under market pressure. After defaulting on five trades amounting to $200,000, the Russian Central Bank suspended its trading license, which paralyzed the brokerage and sped up its fall.


An exception in the climate of downsizing is Troika, which, like a few other investment houses, is beefing up its high-level professional staff and expanding operations in preparation for healthier times. In April, Troika added on a new business to broaden its base -- a clearing brokerage firm.


-- Alexander Gordeyev contributed to this report.