The Chicago Mercantile Exchange (CME) is cutting 5% of its workforce as part of a major restructure, with IT staff forming a large portion of the cuts.
However, the move by the major trading firm to reduce IT roles is unlikely to become a trend due to IT’s important role in meeting new regulatory rules in a heavily computerised industry.
The trading exchange said recent changes in the trading sector has meant the need to restructure. The cuts – of about 150 people – will reduce costs and management layers, and most will be made from the IT department, according to a report in the Wall Street Journal.
In a statement, CME Group president Terry Duffy said the move is the result of the industry transforming over the past five years.
“These staffing changes and other expense control measures we have taken internally will result in decreased costs and reduced management layers, and will help ensure the company's long-term continued growth," he said.
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The exchange’s CME Globex electronic trading platform matches buyers and sellers, and has trading facilities in New York and Chicago.
Despite the changes in the industry mentioned in the CME statement, CIO at interdealer broker Tradition Yann L’Huillier said job cuts in the trading sector is unlikely to become a trend because of the pressure on companies to meet their regulatory requirements.
“I don’t think there will be a trend of cutting IT jobs because of all the stuff going on in the regulatory space, particularly with the US Securities and Exchange Commission (SEC). There will actually be more demand for IT staff to help them meet the regulations,” he said.
Regulators in the trading sector have increased activity in recent years. For example, in 2013 the SEC introduced measures to prevent software failures that have blighted the US trading industry. These rules apply to any companies trading with US organisations, including UK firms.
Closer to home in April 2014, members of the European Parliament (MEPs) voted through rules to control high-frequency financial trading that will see the introduction of circuit breakers and testing of the algorithms used by trading firms.
According to a report, MEPs approved rules that will see circuit breakers introduced to automatically stop trading when there is too much price volatility. The report also said algorithms used by trading firms will have to be tested and authorised by regulators, and records of orders and cancellations will have to be stored and made available upon request.
Meeting regulations like these requires industry and IT knowledge, which puts experienced IT professionals in the sector in demand.