Everyone knows that there's been pain at KCG in London this summer. Following KCG Holding's acquisition by high frequency trading firm Virtu Financial, the London proprietary trading business was closed in July and people were ejected - voluntarily or otherwise. In future, Virtu has said it will retain a London office, but only for "client facing trades". Henceforth, it said the "market making business" will be based in Dublin, where Virtu has its European headquarters.

Virtu didn't respond to a request to comment for this article, but this official version - which implies that "high touch" traders will be based in London and that everyone else might move to Ireland - doesn't do justice to the upheaval at the firm in the past month.

"At least sixty people have gone from KCG," says one London headhunter, speaking on condition of anonymity. "There have been two or so tranches of layoffs so far and there are more to come - people are being let go across the business." A KCG insider says 70% of the London office have been made redundant: "London was not profitable, so they fired enough people to be flat."

The UK's Financial Conduct Authority register says 18 people were de-registered from KCG in London in late July, a decline of 38%. They include: Paul Bermingham, the former head of European ETF trading, who joined from Spire Europe in 2014; Robert Crane, the former Goldman head of electronic market making, who joined in 2015; Ivan Gilmore, the former head of exchange-traded fund sales trading, hired by Crane from DE Shaw in 2016 as head of ETF sales; and Graham Wayne, the former head of EU electronic trading (who, as we reported last month, is joining Barclays). Phil Allison, the CEO of KCG Europe who was hired from UBS in 2014, has gone too, as has Elio Manca, head of ETF sales in Europe (although insiders say he wisely went before Virtu appeared on the scene).

Despite KCG's reassurances, what emerges therefore is a portrait of a business that's doing a lot more than just cutting London prop traders while keeping high touch traders and salespeople. The ETF business is seemingly being disbanded from the top down. No one (as far as we can make out) has moved from London to Dublin - most have simply been dumped without this even being on the table. Market makers like Michael Cahill, who might have gone to Ireland, have left for other firms in London instead (Cahill's joined Bats Global Markets). Senior quant traders like Sam Patterson and Cameron Dobbs have gone, along with the likes of Alexis de Saint-Romain, a French speaking electronic and algorithmic sales trader. Junior analysts like Echo Qing Chang have gone too, as have senior technologists like Andrew Schneider.

"A lot of people have disappeared from KCG, many of their own accord," says another headhunter, also speaking off the record. "Some of them have been offered moves to Dublin but they don't want to go - why would you when there's still plenty on offer in London."

If this is the case, then KCG could be a premonition of what's to come when other banks try shifting traders to Dublin. Bank of America, Citi, Credit Suisse and Barclays are among those expected to move jobs to Dublin because of Brexit (although in the case of Citi and BAML the jobs may be back office). As we suggested before, it may be necessary to offer traders financial inducements to emigrate.

If ex-KCG traders prefer to stay in London, headhunters say there are plenty of places that would like to hire them. KCG recruited heavily from investment banks in recent years and top bank traders were only too happy to work there. - KCG was not subject to regulatory restrictions on bonuses and paid exceptionally well. While everyone waits to see what happens to big names like Crane and Allison, headhunters say even less feted ex-KCG people should have no trouble finding new jobs. "These are very good quality people," says one headhunter. "Banks want to hire them, so do firms like Citadel Securities and Tower."

Just as telling as who's left KCG/Virtu though, is who's been left behind. For the moment, the combined firm still has the remnants of an ETF team in London. Quant traders like George Danker (the UK Su Doku champion) and quant strategist Alexey Sorokin are also still at their seats.

Meanwhile, and despite the reassurances, the indications are that almost no one from KCG has joined Virtu. Those who have joined the new parent company in London can seemingly be counted on one (or maybe two hands). They include: Stefan Zohren, a machine learning specialist; Fabio Martinell, the former head of EU market making sales and KCG and now co-head of electronic execution services at Virtu (in London); algo developer Oliver Egli; head of global systems and operations Igor Selivanov; and former head of delta one sales, Michael Seigne.

KCG insiders say another round of layoffs is due next month. What looked like an appealing alternative to a large investment bank has proven anything but. Worse, the survivors may yet quit of their own accord - Virtu is said to be imposing new contracts which are far less generous than those people signed up to at KCG.

Contact: sbutcher@efinancialcareers.com

Photo credit: ¿Hace un pinchito? by Chema Concellón is licensed under CC BY 2.0.