More freewheeling traders are leaving the big banks

January 11, 2014
January 11, 2014

Risk-taking traders at the world’s biggest banks are on the outs.

That’s one conclusion from some recent high-profile departures at firms like Morgan Stanley and Barclays, which have further whittled away the ranks of financial crisis-era freewheeling traders.

Take Jonathan Hoffman, a global rates trader at Barclays who quit the firm recently. (A spokesman confirmed his departure to Quartz and Hoffman couldn’t be reached separately for comment.)

A former Lehman Brothers trader heavyweight, Hoffman was among the highest-paid executives at Lehman prior to its bankruptcy. He pocketed a handsome $30 million one year before the firm, run by CEO Dick Fuld, collapsed under the weight of its own  financial bets.

It’s unclear exactly what led to Hoffman’s recent exit from Barclays. But Barclays, like many European banks, has been scaling back its risk taking as regulators impose tougher rules to guard against a repeat of the global credit collapse.

Hoffman’s exit follows the very recent departure of another prominent banker, head of interest rates trading at Morgan Stanley Glenn Hadden. A former Goldman Sachs trader, Hadden was known for an aggressive risk-taking style and was probed by regulators in 2012 over US Treasury trading executed in 2008.

In the US, the implementation of new financial regulations including the Volcker Rule has played a big part in the departure of swashbuckling traders, as banks aim are taking a more conservative tack. Hadden’s former boss, Morgan Stanley CEO James Gorman, has made his aversion to risk clear and has pegged the success of the firm to its wealth management unit.

Such moves are likely to push traders like Hadden and Hoffman into the world of hedge funds and other areas less targeted by regulators than the big banks.

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