Nomura bets on market volatility with macro trading push
Nomura is investing to expand in macro trading as the Japanese bank bets that the volatility that has rocked financial markets in early 2026 is set to continue.
Bond and currency markets have swung wildly in recent weeks as the outbreak of the US-Israeli war against Iran has sent energy prices soaring. That volatility has triggered a deluge of trading activity as investors grapple with the prospect of a global inflationary shock that could cause some central banks to change course by hiking interest rates.
Nomura is one of several banks to reinforce its macro business in recent quarters, focusing on products linked to interest rates and foreign exchange, as part of a multiyear rebuild of its trading division.
Rig Karkhanis, Nomura’s head of global markets, said the bank plans to make further “selective” hires across macro trading and sales in the coming months. That includes growing its presence in US rates and Asia FX trading.
“We’re entering a period of more volatility, so macro businesses are likely to become more important,” Karkhanis told IFR in an interview. “We will be bolstering our macro business, which tends to outperform during market stress events.”
Asked specifically about events in the Middle East, Karkhanis said Nomura continues to stay close to clients to support their liquidity needs in these volatile markets, while regularly stress-testing its business across various scenarios. The bank said its macro client franchise is up about 20% in the current quarter versus the same period last year, following a jump in trading volumes.
“We have seen unprecedented volatility in the markets since the end of February when the ongoing Iran war started,” he said, highlighting moves in oil, rates markets and Asian equities. “We are focused on maintaining strong risk management standards across businesses.”
Macro moment
The Iran war is the latest in a series of geopolitical and socioeconomic events that have convulsed markets over the past year, including US tariffs, fears over the disruptive nature of AI and the appointment of a new US Federal Reserve chair.
That volatility has been a boon for macro trading business as investors and companies have been forced to review their market exposures following sharp moves in the US dollar, government bonds and commodities. Karkhanis said Nomura’s macro client franchise has grown by more than 10% in the current fiscal year, which ends on March 31.
“We have had several periods of volatility in 2025/26, starting with ‘liberation day’ in April,” said Karkhanis, referring to US president Donald Trump’s announcement of sweeping US tariffs last year. “Our macro client franchise has seen robust performance through the year.”
Nomura said it has hired 25 bankers in its macro trading business since 2023, while keeping headcount roughly flat overall. Notable appointments include Hemish Shah and David Leigh, who joined as head of EMEA flow rates and co-head of global FX and EM respectively in 2024, as well as Moritz Westhoff, who was appointed head of US rates in August.
Looking ahead, the US should be an important area of focus for markets with midterm elections scheduled for November, as well as the end of Jerome Powell’s tenure as Fed chair in May. Trump’s pick to succeed Powell, Kevin Warsh, has been sympathetic to the president’s desire for lower interest rates – putting him at odds with other members of the Fed’s rate-setting committee. The Fed held rates steady at its meeting on Wednesday as economists debate the impact of energy price shocks on inflation.
“The US is obviously the biggest market and there are many interesting things ahead of us like a new Fed chair coming in and the upcoming midterms,” Karkhanis said. “That will create increased market volatility, which is good for markets businesses.”
Multi-year revamp
Nomura’s macro push is part of a broader overhaul of its trading division in the wake of it sustaining a US$2.9bn loss from the collapse of Bill Hwang’s Archegos Capital Management in 2021. Karkhanis, a former macro trader, was appointed head of global markets in early 2023 as part of a management shakeup that also saw the arrival of former JP Morgan executive, Chris Willcox, as head of wholesale.
Unlike some rivals, Nomura avoided kneejerk closures of certain businesses following the Archegos debacle. Instead, the bank focused on strengthening risk management processes, reinforcing relationships with its top clients and growing more stable streams of revenue.
“The US client incident was deeply impactful to the firm, and we went through a holistic remediation process,” said Karkhanis when asked about Archegos. “On the business front, we largely stayed the course, believing these were important businesses for us to continue investing in, and to fix and grow them.”
Nomura adopted a more global and data-driven approach to its clients to arrest a decline in client revenues. That included switching to a single equity execution platform for all clients across regions and paying greater attention to metrics such as the resources it allocates to clients versus the returns generated from them.
The bank’s client revenues are now running 20% above previous historical highs and are on track to hit record levels in the fiscal year 2025 to 2026. Meanwhile, “repeatable” revenue streams – such as financing, commissions and advisory activities – now account for 55% of all client revenues. That is up from 45% three years ago, underlining how Nomura has reduced the volatility of its trading division.
“When we look at the last five years, we saw a sharp V-shaped recovery in the client franchise,” said Karkhanis. “The client business had fallen pretty precariously for a couple of years after 2020. Starting in 2023, our number one priority was to pivot to being client-focused so that we could arrest the slide and start turning things around.”
Market tailwind
Initially, Nomura prioritised growing its equity and credit businesses to benefit from what it believed would be favourable market conditions as central banks paused their interest rate hiking cycles in 2023. That involved directing resources and headcount towards areas such as equity derivatives, securitised products, private credit, and its structured and solutions businesses.
Nomura's equity products business, along with securitised products and private credit, are now at – or close to – all-time highs in revenue terms, Karkhanis said. There was also a targeted effort to grow with real money clients, such as pension funds and insurance companies, leading to a doubling of these client revenues over the past three years.
“There’s been a very significant tailwind to the market. The whole industry has grown,” said Karkhanis. “We’ve also grown by a similar amount, but we’ve done that while keeping headcount mostly flat and improving the efficiency of our financial resources.”
The overhaul has also bolstered Nomura’s already strong position in brokering client flows in and out of its home market. International investors have renewed their interest in Japan in recent months following the landslide victory of prime minister Sanae Takaichi. Many economists believe Takaichi’s policies will usher in a new era of higher inflation following decades of ultra-low interest rates – a regime change that could pave the way for an uptick in client trading activity.
“One of our key focuses this year is to get Japan connected globally,” said Karkhanis. “We’ve had 35 years of deflation and are clearly out of that cycle, with monetary policy normalising and growth steadying. Results are much improved, the economy is hotter and the financial industry is much more buoyant given non-zero interest rates – and we're obviously positioned well for that.”