Goldman Sachs' new London trading floor keeps equity traders like 'battery hens' - Josh Loe

Goldman Sachs’ new London trading floor keeps equity traders like ‘battery hens’

Goldman Sachs has told staff to “get ‘move ready’ now” for the transfer to the bank’s new 1.1 million square foot London headquarters, around the corner from St. Paul’s Cathedral and within the ancient Roman walls enclosing the Square Mile.

The building, in Plumtree Court in Farringdon, cost an estimated £1 billion. It will host about 6,500 employees. The plush trading floor is the site’s centerpiece. It’s the size of a stadium soccer pitch. The bank boasts that it’s the biggest trading floor in the UK capital.

According to an April 29 “Plumtree Court Newsletter” to Goldman’s London staff, seen by Business Insider, the bank called on workers to shred documents that need shredding, take home umbrellas and other items, and clear workspaces before the big move starting in the summer.

Some are already complaining.

The picture above, which a Goldman Sachs representative sent to Business Insider, is of the trading for the unit dubbed FICC (fixed income, currencies, and commodities). It’s bathed in light from the surrounding glass walls.

The equities trading floor is below that one, and doesn’t have the same high ceiling atrium. A spokesman insisted the shaft of the building allows plenty of light throughout.

That has led to talk among some equity traders in the bank’s current Fleet Street location in London that “we’re going to be caged in like battery hens,” one insider says.

The complaint stems from the tendency within banks to separate equity trading floors from fixed-income ones, and speaks to a decades-old rivalry between traders of different asset classes and the ebbing and waning status of their units in bringing in profits for the bank.

“Fixed-income floors tend to be nicer, they have better screens and better tech,” said one veteran fixed-income trader in London who has had stints at various banks. (The trader has never worked at Goldman Sachs.)

In general terms, cash equity trading tends to be more standardized, is typically executed via stock exchanges, and is seen as fairly straightforward, excluding more complex areas of trading such as derivatives and delta one. Bond and currency trading has historically been conducted over the phone, is more relationship driven, and hasn’t been automated to the same degree ( although that’s beginning to change.)

It’s for this reason that in “Liar’s Poker,” Michael Lewis’s iconic memoir of life as a bond trader at Salomon Brothers in the ’80s, bond traders joked about the worst, lowest-of-the-low job anyone in finance could ever end up in: “ Equities in Dallas.”

“Fixed-income guys usually view equities guys as being stupid,” the fixed-income trader said. “And equities guys look down on fixed-income guys — they feel they get all this balance sheet, but don’t make any money.”

While bond desks used to be huge at banks, that has slowly been changing. For Goldman Sachs, the equities and FICC divisions brought in roughly the same revenue last quarter, though equities missed analysts’ expectations while FICC delivered a beat.

Since 2016, annual revenue for equities has eclipsed that of FICC at the bank.

See below, from the bank’s 10-K statement:

Goldman’s FICC division in 2016 eclipsed the equities unit. The roles are now reversed.
Goldman Sachs

One insider said the reason the equity floor is below the main atrium FICC floor is because FICC doesn’t need “compliance walls,” but equities does. Dropping walls within an atrium is a trickier task than in a space with a lower ceiling.

A separate Goldman Sachs trader in cash equities was more positive about the move, waving away the comparisons between trading floors, assuming they’ll both be roughly the same.

The trader added that they very well should be:

“We make as much, if not more, than FICC,” the trader said. “It’s a real business.”

A view of the new trading floor.
Goldman Sachs

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