Tullett Prebon says it will be cutting around 210 jobs, in a bid to further reduce its headcount and other fixed costs after reporting a 15% drop in H1 revenues.
Sources close to the matter tell Profit & Loss that the cuts will likely be across the board, including the FX desks.
“It isn’t all that surprising as most of its business is now moving to machine,” one industry commentator says.
The interdealer broker states that the cuts are part of a “cost improvement programme” in which it plans to reduce annual fixed costs by over £40 million through the “exit of around 160 front office headcount and around 50 back office headcount and vacating office space”.
Revenues for the first six months reached £360 million, a drop of 15% year-on-year, while its underlying pre-tax profit declined nearly 31% to £43 million over the same period.
Tullett’s profits before tax also fell to £9 million from £52.5 million, due in part to the cost of legal action between the company and BGC.
Revenue from treasury products, which relate to FX and cash, dropped 12% year-on-year to £97 million, which the firm says reflects the lower levels of market activity in major currency spot and forward FX markets, as well as the cash deposit markets.
Activity in emerging markets currencies, particularly in offshore renminbi products in Asia, was stronger than in the major currencies, Tullett adds.
Chief executive Terry Smith, who will be stepping down at the end of August, attributed the decline to challenging market conditions throughout the first half as the overall level of activity in the financial markets remained subdued.
“We cannot predict when the level of activity in the financial markets we serve may increase, and it would be prudent to expect that market conditions will continue to be difficult,” he says.
“The widespread tranquillity in the markets we serve, the introduction of regulatory reforms in many of those markets, and the structural pressures on many of our clients combine to make the current environment challenging.”
Smith adds: “We expect that the benefit of the actions being taken to further reduce headcount and other fixed costs will be reflected in the results for the second half of this year.”