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Equities Trading Drought Spurs Layoffs at Liquidnet

Liquidne laid off more than 30 employees at its New York headquarters last week, just under 15 percent of its workforce.

NEW YORK -- Liquidnet, an all-electronic stock broker, said it laid off more than 30 employees at its New York headquarters last week, just under 15 percent of its workforce.

The New York-based company is the latest to shrink as the equities trading business slows globally.

Liquidnet, which employed 331 people worldwide as of early September, is also considering cutting staff at its London operations, where it employs about 45 people, spokeswoman Melissa Kanter said.

"Liquidnet has taken steps to reduce headcount in selected parts of our business, reflecting the results of a review of our operations and the slowdown in global equities trading," the company said in a statement.

The layoffs highlight that even fully electronic businesses are vulnerable to the steep decline in trading volume that has afflicted the stock market since the second half of 2009. Liquidnet is best known for matching, or crossing, huge orders of stocks from buyers and sellers.

The cuts affected senior and junior staffers across all departments, Kanter said. At its peak around 2008, Liquidnet employed about 470 people.

The layoffs follow the demise of several small traditional equities brokers this year and severe downsizing on the stock- trading desks of giants such as Nomura Securities and Bank of America

Those firms have high overhead costs because of their need to produce research and other services from analysts, traders and salespeople. Nomura earlier this month said it would shift its labor-intensive cash equities operation to the all-electronic model of its Instinet affiliate.

Commission charges also have plummeted over the last 10 years, although Liquidnet still charges a relatively high 2-cents-a-share core commission on trading orders. Its average order size is 50,000 shares, but because it does not service high-frequency traders it is vulnerable to prolonged declines in stock volume.

Liquidnet, which was founded in 2000, filed for an initial public offering in 2008 but dropped those plans because of the financial crisis.

Also this week, RBC Capital Markets reorganized its electronic trading operations. Brian Suth, co-head of the Canadian bank's global trading unit since January, has left the company.

Co-head Thomas Gajer will continue as sole global head of electronic sales and trading. RBC Capital also appointed Gaurav Mundra to a new position as U.S. head of electronic sales and trading. Both report to Bobby Grubert, head of U.S. equities.

Suth, whose LinkedIn page said he ran RBC's electronic sales team from late 2009 to the beginning of this year, did not immediately respond to requests for comment.

RBC remains "fully committed" to the electronic equities business, spokesman Kevin Foster said.

Some of the layoffs at Liquidnet were reported earlier by Bloomberg News.

Copyright 2010 by Reuters. All rights reserved.

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