China’s CLSA shuts US equity research, lays off 90 employees

Chinese Yuan notes. Photo: Reuters

CLSA Ltd., the brokerage owned by China’s Citic Securities Co., shut down its U.S. equity-research operations Monday, laying off more than half of workers based in the country.

Hong Kong-based CLSA dismissed 90 U.S.-based employees on Monday, most of whom worked in research, including research sales support staff, as well as a few traders, according to spokeswoman Simone Wheeler. The terminations include analysts Mike Mayo, a managing director who covered banks, and Avi Silver and Ed Maguire, both of whom wrote about technology firms, she said. Mayo and Maguire declined to comment while Silver didn’t immediately return messages left after business hours.

Financial research houses are facing revenue pressures, including from a proposal in Europe to make investors pay for investment analysis separately from trading commissions. While CLSA Chief Executive Officer Jonathan Slone said the move wasn’t directly linked to the so-called MiFID initiative, he said last week that investors should be allowed to decide what they want to pay for analyst research without too many regulatory restrictions.

The U.S. closure “was not made with any particular rule in mind,” Slone said in an e-mail. “You could say that the overall shift on payment for research was part of this, but this has been a long evolving process linked not only to MiFID but a whole host of changes.”

“We simply plan to invest in other parts of our business in the U.S. and believe we can best serve the clients in cash equities within an execution-only framework in the U.S. domestic marketplace,” Slone said.

Strained Operations

While the rules — under the Markets in Financial Instruments Directive — are a European initiative, banks in Asia are also feeling the effects. Global investors have been allocating a smaller proportion of their commission payments to brokers that provide equity research and advisory services in Asia over the past two years, according to a survey released last month by Greenwich Associates.

Citic Securities, which bought CLSA from French bank Credit Agricole SA in 2013 for about $1.2 billion, considered selling the Hong Kong-based brokerage last year, people with knowledge of the matter said at the time. It cut about 25 staff in Asia two years ago, mainly in equities, a person familiar with the move said then.

CLSA began telegraphing some operations were strained in September, when it asked its 1,500 workers globally to take as many as 10 days of unpaid leave through March as it sought ways to cut costs. The firm introduced similar measures three times — in 2003, 2008 and 2009 — when it underwent trying market conditions.

Execution, Trading

The firm’s Americas unit will now employ 85 workers to execute U.S. and Asia stock trades, plus Asia equities sales, Wheeler said. Those employees, led by CLSA Americas LLC’s CEO Rick Gould, will continue to offer services including sector and portfolio trading, electronic execution and commission management, the company said in a statement Monday.

CLSA, established in 1986, has about 1,500 staff in 25 offices across Asia, Australia, the Americas and Europe, according to its website. The brokerage became well known for its high-profile annual forums, where guests included former U.S. President Bill Clinton and filmmaker Francis Ford Coppola.

Bank analyst Mayo is the author of “Exile on Wall Street: One Analyst’s Fight to Save the Big Banks From Themselves.”

Also Read: CLSA Capital Partners acquires Japan’s staffing firm Outsourcing Investments

Citic Securities said to have mulled selling CLSA brokerage unit

(By Laura J Keller, Arie Shapira, and Cathy Chan)

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.