Morning Coffee: J.P. Morgan alights upon solution for saving London banking jobs. Sudden death of the sales trader

J.P. Morgan London Brexit

Will tens of thousands of jobs move out of London because of Brexit, or will they not? Following recent reassuring reports that banks could avoid a big transfer of jobs with so-called “back to back” trading, which would allow trades to take place in London whilst being booked in the EU, things have been sounding a lot more iffy.

Deutsche Bank told a conference on Tuesday that it needs a “clear view” on the situation by early 2018, when it will need to start implementing its contingency plans.  Sally Dewar, head of regulatory affairs at J.P. Morgan, subsequently informed a House of Lords Committee that the bank will need to “start taking decisions around informing clients” by the end of the first quarter, and that once it’s done so, those decisions will be difficult to unravel. Lloyd Blankfein added to the heat by Tweeting yesterday that he was “struck by the positive energy” in Paris, where a government committed to economic reform is fortuitously combined with good food.

There may, however, be a way out the murk. – J.P. Morgan thinks it has a solution. Or not.

Imparted by Dewar to the House of Lords Committee, J.P. Morgan’s plan for saving London banking jobs involves giving up on “equivalence” and going instead for a bilateral “bespoke agreement” with the EU. Equivalence is no good, said Dewar: it doesn’t cover everything and could be revoked at any time by the EU. What J.P. Morgan has in mind is instead a, “novel, unique, new style of free trade agreement that would go beyond what’s been previously negotiated in the past,” Dewar said. An agreement covering a, “broad range of financial services and a broad range of clients.” The bank’s reportedly been liaising with the British Treasury on its plan. – Is this what Jamie Dimon was referring to last week when he said he felt reassured after meeting prime minister Theresa May and Chancellor Philip Hammond?

Maybe. But J.P. Morgan’s plan sounds as fantastic as the man posing as an ex-Goldman Sachs banker who was bullied out of the firm because of Brexit. While J.P. says the EU will have reason to go along with the plan because of, “the uniqueness of the relationship between the UK and the EU,” there’s no indication that it will do so. And, as with everything else, any new agreement would need to be ratified by each member of the Union individually – which hardly seems likely to happen by March 2019 given an agreement has yet to be mooted, let alone agreed upon in principle and then drawn up in practice. In the meantime, the Telegraph says J.P. Morgan has already started telling staff in London whether they’ll be moving.

Separately, the UK’s Financial Conduct Authority casually did away with the jobs of sales traders yesterday. The Financial Times reports that the FCA suddenly said that the content produced by sales traders will count as research under MiFID II. This means that sales traders will no longer be able to talk about trends and offer “market colour” to clients without charging separately.  “It makes the job of the salesman ever more redundant because he’s not allowed to have a view on anything,” said a senior executive at a London stockbroker.


The ECB has criticized banks that only want a “letter box” in the EU after Brexit, says they’ll need “substance” locally. (Bloomberg)

Bank of America plans to move 200 sales and trading jobs to Paris. (Bloomberg)

Making MD at Goldman Sachs is a hideously stressful process that goes on for four or five months. (Financial News)

Wall Street Journal perfects the art of making John Cryan do something he doesn’t want to. (WSJ)

What does it mean when a investor specializing in distressed investments takes a 3% stake in Deutsche Bank? (Bloomberg)

J.P. Morgan’s chief technology officer for new product development joined a data and technology analytics firm. (The Trade News)

The UK is going to offer 2,000 extra visas to technologists. (Reuters)

Traders will get smaller bonuses this year, unless they work on electronic trading systems. (Business Insider)

Citi hired a Goldman banker to work with U.S. private equity funds. (Business Insider)

“I’ve already been to four Brexit parties to celebrate finance professionals moving out of London.” (Le Monde)

Moderate alcohol consumption improves your ability to speak a foreign language. (BPS)