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This is the second round of layoffs for the US-based discount brokerage. In March, Schwab cut 3,400 jobs (nearly 13% of its workforce).
The cutbacks involve 1,600 to 1,900 full-time employees and about 200 contractors by the end of October, plus a reduction of 200 to 300 full-time employees through attrition. Schwab plans to take a pre-tax charge of about $225m (£155m) to reflect the restructuring, the company said.
The continued decline in the stock market has resulted in a 50% drop in trading activity by Schwab clients since January. The average number of trades per day dropped from 281,000 in January to 112,000 earlier this month.
The slowdown in trading means that by the end of 2001 the company will have shed a quarter of the staff it had in January. The company also announced the removal of some of its systems hardware from service, including data storage, transmission, routing and middleware systems.
Schwab has not specified how the systems would be affected, nor how many IT workers would be laid off. The company has been very heavily IT-oriented during the past three to four years as it has become the top online brokerage.
In the announcement on 30 August, David S. Pottruck, the Schwab president and co-chief operating officer, said: "We remain focused on expanding the trading and administrative support services available to the investment managers who use Schwab, including improvements to their business management and client service technology, and we're expanding the wealth management services and investment alternatives available to them and their clients."