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June 30, 2003

The Worst May Be Over for Job Cuts

By Peter Chapman

Is there finally light at the end of the tunnel for trading professionals?

Employment on U.S. equity trading desks has stabilized after a large decline last year, according to a new study by TowerGroup, the Needham, Mass.-based consulting firm.

Staffing on market making, agency, sales trading and proprietary desks is expected to shrink further this year, but by only about one percent, TowerGroup predicted.

Between February 2002 and February 2003, according to TowerGroup, the number of U.S. equity traders shrank from 17,650 to 16,150. That's an 8.5 percent drop, or a loss of 1,500 jobs.

This year's expected one percent decline translates into a net loss of 250 jobs. It will bring the industry's total headcount to 15,900. The change is a net figure, indicating that more than 250 traders could lose their jobs as others are hired. The study does not take into account staffing on the floors of U.S. stock exchanges.

Last year's decline was due to several factors, according to Miranda Mizen, the TowerGroup analyst who authored the report. Firms exited the trading business or downsized. Agency and market making desks were merged. Nasdaq desks were similarly combined with listed and international desks. The increased automation of trading and order handling also contributed to the job losses. This trend is behind the drop in employment in Mizen's 2003 forecast.

In calculating the trading headcount, Mizen used, as her starting point, the number of turrets on U.S. sellside equity desks. She admits the effort was "not an exact science."