Several stockbrokers in London are in talks about merging back office operations, in a bid to cut costs and avoid becoming takeover targets in a rapidly consolidating sector.
The Financial Times reports that, 'according to people familiar with the situation, the informal discussions are in early stages and have been prompted by increasingly difficult market conditions that have led to a spate of job cuts and acquisitions among brokers. If a deal to join back office functions is agreed, it would demonstrate an unprecedented level of co-operation in the fiercely competitive sector'.
But the smart money at the big investment banks are now seriously considering sharing back office and technology platforms in a bid to save on costs.
One banker told Here Is The City: 'At a time when costs are key, and the investment banking industry is going through a period of structural change, sharing or pooling back office and support functions is a no brainer. As long as you can strip out the sensitive functions, you can easily package up the rest and deal with it collectively. All you need to do is to create an independent entity, which all the firms own, and introduce a fee structure based on, say, trade volumes. Think of the economies of scale'.
Stockbrokers look at pooling back offices (subscriber content)
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