The equity casino is going to draw its curtain soon

Agencies reported that Stanchart has announced that it ‘is closing its equity derivatives and convertible bonds businesses.’ This is a follow up on its earlier announcement ‘to axe thousands of jobs globally as it dismantled its stock broking, equity research and equity listing desks.’

What this news is saying is that a big global bank is finding it tough to make money in equities, bonds and derivatives and finds it necessary to close down these businesses to cut losses. Is this move a trend that is also affecting other big banks, and what does this portend for the industry and the stake holders like traders, remisiers, research and backroom staff? Would Stanchart be the Pipe Piper leading a trail of banks and broking houses following behind to close down the same operations and cut staff?

It is strange that Stanchart is cutting down on equity derivatives when this instrument is supposed to be gaining popularity with rising volumes in daily trades. Or is it that Stanchart is underperforming the market and losing money while other players are laughing to the banks? What is the truth?

The truth will come in the next few months if other banks continue to trade happily in equity derivatives or starting to cut cost by axing their staff in equity and derivatives. The analysts and research staff would also be on the laid off list.

Wither the stock market and derivative industry? Is it flying high or sinking in quick sand?