While proprietary traders are about as popular Adam Smith at a Marxist reunion, agency salespeople are emerging as the new hot thing. This does not mean banks are actually hiring for their agency businesses, but nor are they particularly firing. And smaller brokers are building up.
Euromoney recently highlighted the resurgence of agency businesses at houses like Evolution, which brought in a former Lehman MD in November.
The joy of agency sales in the current environment is that the institutions involved aren't required to take on any risk.
Instead, securities are exchanged between third parties with the salespeople acting as the intermediaries who match them up.
Evolution isn't the only place which has been hiring. Euromoney also points to recruitment at Christopher Street Capital and the formation of a new agency business, Hoare Capital. Recruiters say that Liberum Capital, Blue Oar Securities and a Redburn Partners have been recruiting too.
The shift back to agency business reflects a new emphasis on sales relationships rather than risk taking, and headhunters say the best agency salespeople come equipped with a strong contacts book.
"You need to be very well connected electronically so that you have quick access to maximum pools of liquidity, but you also need to be very well connected personally," says Mark Horlock at search firm Marshall Warburton. "You need to know who to talk to on prop trading desks or at hedge funds or instutional investors so that you can find buyers."
John Burr at search firm Principal Search says standard flow traders might be drawn to a new career in agency sales by the fact that commission in agency businesses is often a fixed percentage of P&L rather than a discretionary number.
Burr also predicts more agency hiring in 2009, particularly from mid-market brokerage houses, which historically didn't look to compete with investment banks' large research and strategy teams. "Within this environment, agency relationships can facilitate liquidity and liquidity is one of the key criteria determining who a trade is awarded to."