Morgan Stanley Traders Join Hedge Funds Amidst Job Cuts
Two senior traders from Morgan Stanley have recently made the decision to pursue opportunities in the hedge fund sector, joining prominent firms Millennium and Citadel. The move comes amidst job cuts at Morgan Stanley, where the bank announced 3,000 job reductions earlier this year.
Chris Rivelli, who served as Morgan Stanley’s head of EMEA FX derivatives and global exotics trading in London, will be joining Millennium as a macro portfolio manager in St. Helier, Jersey. Meanwhile, Ben Levine, a managing director in the New York derivatives structuring team, will be leading Citadel’s risk transfer solutions team in New York.
It is worth noting that both traders’ decisions to leave Morgan Stanley are unlikely to be related to the job cuts the bank has implemented. While Morgan Stanley has not disclosed specific headcount reductions within individual divisions, its investment bank reported an increase in total compensation spending by 8%.
This move towards hedge funds can be attributed to the attractive compensation packages they offer compared to banks. Bank traders typically receive around 5% of the profits they generate as a bonus, while hedge funds tend to offer bonuses in the range of 10-15%.
Millennium, in particular, has been expanding its workforce in London, with headcount increasing from 566 in 2021 to 765 in 2022. The hedge fund paid an average of £1.1 million ($1.3 million) per employee in London last year.
In addition to hiring traders, Millennium has also made strategic acquisitions, such as hiring a new head of AI from Bloomberg in New York and a JPMorgan tech managing director for their rates and macro technology division in London. The hedge fund recently partnered with Schonfeld, another prominent hedge fund, to manage a portion of its capital.
This migration of traders to hedge funds reflects the shifting landscape within the financial industry and the allure of potentially higher compensation. It will be interesting to see the impact of these moves on Morgan Stanley and the performance of the traders in their new roles.
Morgan Stanley is set to announce its third-quarter results next week, following a decline in revenues and profits for its investment banking division in the first half of 2023. Despite the job cuts, the bank’s decision to increase compensation spending suggests its commitment to retaining top talent in the competitive trading industry.
As the financial sector continues to evolve, it is likely that we will witness more traders making similar moves, seeking opportunities that offer greater financial incentives and career prospects beyond traditional banking roles. This trend highlights the need for banks to reassess their compensation structures and adapt to the changing preferences and expectations of traders in order to retain their top performers.
