18/01/2012 Author: Elana Margulies

Merlin increases headcount but warns of PB uncertainty

US prime broker Merlin Securities has made a number of new hires this month, but they come at the same time as one of its senior partners warns of a turbulent year ahead for job security in the PB space.

Ron Suber, a senior partner and brokerage professional, said that firms were facing significant headwinds caused by the simultaneous decline in exchange volumes, deleveraging, very low market volatility, as well as market correlation and meagre returns.

His warning follows the recent departure of Morgan Stanley’s head of US prime brokerage sales, Michael Fitzgerald, a move revealed by HFMWeek.com last week.

“[This year] is poised to present all of us not only with continued challenges and uncertainty but also with opportunity as the environment evolves,” said Suber.

"In order to win going forward, firms must innovate with sharper tools, differentiated solutions, and a very clearly defined value proposition," he added.

Banks are said to be continuing to experience a decrease in trading volumes, deleveraging, low VIX and low interest rates – adding to a growing list of factors punishing the P&Ls of these groups.

The anticipated culls would follow recent job losses at BNP Paribas, while Wall Street talk suggests further jobs could go at several leading investment banks. Morgan Stanley declined to comment on the matter when contacted.