CIBC Oppenheimer closed its trading desks for mortgage-backed securities and emerging markets Tuesday, firing 27 traders and support staff.
Twenty people from the mortgage-backed operation were dismissed, along with seven from the emerging markets group, the company said.
The CIBC move, unlike that of other players who have retrenched this year, was mainly aimed at cutting costs and not a response to market conditions, Wall Street sources said. The Canadian Imperial Bank of Commerce unit did not have a top-tier mortgage-backed operation and was not a major force in the fixed-income market, they said.
Traders at CIBC Oppenheimer had known for months that their desks would be closing, these sources said.
Kyle Permut will remain managing director of the fixed-income area, said Debra Douglas, managing director and head of marketing and communications.
The unit will no longer be a "principal provider" of mortgage-backed and emerging market securities, Ms. Douglas said, though it will provide these products "on a best-price basis."
It has established a private-client agency desk that will provide these products, among others, to retail brokers and clients, she said. The new desk will have a staff of about 12, she added.
CIBC Oppenheimer ranked 17th as a manager of mortgage-backed issues, with a 0.2% market share. This year it has brought to market five issues with proceeds of $508.4 million, according to Securities Data Co.
The unit ranks 32d as a manager for all debt and equity issuance, with 22 issues brought to market and proceeds exceeding $2 billion.
When the Canadian bank acquired Oppenheimer & Co. last November, their broker-dealer operations were merged. CIBC Oppenheimer is the U.S. unit of CIBC World Markets, Canadian Imperial's wholesale banking operation.
"We tagged 1998 as the year in which we would finalize our integration," Ms. Douglas said.
Earlier this year UBS Securities, HSBC Securities, Donaldson, Lufkin & Jenrette, and Chase Securities all trimmed or closed their mortgage-backed- securities operations. They did so in response to the wave of refinancings, reduced profits, and the stronger markets in commercial and asset-backed securities.
