Job cuts are the new normal on Wall Street

Big banks, big job cuts
Big banks, big job cuts

Goldman Sachs was the latest bank to announce additional job cuts Thursday. And, according to Mike Karp, CEO of Wall Street recruiting firm Options Group, layoffs at investment banks are now just par for the course.

"These bankers have finally realized that the markets will never be the same as they were pre-crisis or even post-crisis," Karp told CNBC's "Power Lunch" Friday. "Bank jobs are going to look very different."

Fixed income has suffered from regulation and capital requirements, affecting volumes and ultimately dragging salaries down, Karp said.

"There's going to be compression on compensation, there's going to be compression on how many people get hired," Karp said. "I haven't heard firms going out and saying we're increasing our headcount."

Bank of America, Credit Suisse and Morgan Stanley are some of the other banks that have announced bigger-than-usual layoffs in the U.S. this year. The S&P financial sector is down nearly 5 percent year-over-year.

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Karp highlighted a migration towards electronic trading and financial technology. And on the buy side, he noted, many hedge funds are converting into family offices.

"The market's going to look very different in the next two years," Karp said. "Electronic trading is going to become more and more on the forefront on both the sell side and the buy side world."

John Ricco, partner at Wall Street recruiting firm the Atlantic Group, disagreed, saying job cuts are only a short-term pullback in the market.

"When the market improves you're going to have an increase," Ricco told "Power Lunch" on Friday. "Hiring's maybe gone from banks to publicly traded partnerships, technology might be a piece of that, but that's not the whole of what's going on."