Wall Street Street bonus pool, already shallow, is drying up

Discussion in 'Wall St. News' started by JamesL, Feb 25, 2013.

  1. JamesL


    The final tally on this season’s Wall Street bonuses is in — and it’s brutal.

    Payouts for 2012 are at historic lows, as average compensation for traders and bankers has plunged by almost 40 percent from the previous year, according to surveys and industry analysis.

    This sharp slide continues a dismal trend, with the average bonus for a huge swath of Wall Street employees barely reaching, or falling below, $100,000 for 2012 work.

    In 2011, the average Wall Street bonus fell to $121,000 from $139,000 in 2010 and $141,000 the year before, according to the Office of the New York State Comptroller. The last time Wall Street had such a miserable bonus season was during the financial crisis. (The average bonus in 2008 hit $101,000.)

    “It’s been another tough year on Wall Street, and probably across all bonuses categories,” said Kevin Callahan, CEO of electronic-trading firm AX Trading Group. “We’re in the equity-trading world, and we hear it every day. Volumes are down double digits.”

    Those volumes generate profits that power many of the bonus mills — so a plunge in those bonuses was inevitable, says George Hessler, CEO of trading operator Deep Liquidity.

    Aside from bankers at isolated holdouts such as UBS, who apparently are in the dark about their latest bonuses, most are either aware of, or have already received, their 2012 comp. The average fell by more than a third, or 36 percent, in 2012 compared with the previous year, according to the 2012 eFinancialCareers Bonus Survey. Front-office pros, such as bankers, traders and other front-office revenue generators, took the biggest hits: Their bonuses declined 38 percent over the previous year, according to eFinancialCareers. In contrast, workers in middle-office jobs (in the credit or risk departments, for example) saw 2012 bonuses decline 15 percent compared with 2011.

    John O’Shea, chairman of Global Alliance Partners, said the chatter is that any employee at one white-shoe firm who generates income of $350,000 or more annually was paid a bonus this season that vests over three years. People familiar with this arrangement identified the firm as Morgan Stanley, noting that this kicks in on bonuses at the $50,000 level and above. The first tranche of the bonus, half cash and half stock, is not paid out for a year, these people say. No cash, therefore, is paid in 2013. Morgan Stanley had no comment.

    Wall Street has sharpened the sword. The new comp model stresses “pay-per-performance,” and adjusts for risk-taking, eFinancialCareers notes.

    None of this surprises Global Alliance’s O’Shea.

    “Some people are being told, ‘You are lucky to have a job, so just hang in there,’” O’Shea said.

    Read more: Wall Street bonuses for 2012 at historic lows; average compensation for traders and bankers down almost 40 percent from previous year - NYPOST.com http://www.nypost.com/p/news/busine..._shallow_o30gNhD7mehUINJj7MCL5N#ixzz2LxqrwcxV
  2. Bob111


    i've been saying same thing for a while..but many people on ET still disagree that trading is dying and dying fast.
    this is what you get,when you kill the golden goose-retail trading.
    i thought that WS where smart,when they bank on mortgages. i thought they know something about real estate, that i don't..turns out they are dumber than a box or rocks, living from bonus to bonus..but smart enough to put the burden on tax payers when s**t did hit the fan. then -when they are methodically killing retail trading- i said-wft? are they crazy or just plain dumb? turns out-YES,they are. yeah..try walking in my shoes..
  3. It's Self-Cannibalization at this stage. Many Brokers have had to raise commish to make up for the lack of volume, even posts on this forum are dwindling year on year.
  4. I agree with Bob.

    I remember writing (about the HFT war games) that what happens to the small fish, eventually hits the large fish. We are in the environment together.

    Soon firms will be passing the hat again.
  5. zdreg


    "what happens to the small fish, eventually hits the large fish"
    we should all live so long. for a hundred years+the specialists were ripping off the small fish and retail brokerage forms were ripping off retail customers with fixed commissions.
  6. Bob111


    not to a current extend. we have now zero transparency on equity markets. every single rule that was outhere is against us.
    every possible form of cheating is legal now. i mean-literally EVERY possible one. few days ago one guy said on seeking alpha-i long CBMX and here is why i think it will double before month ends. stock shoot up 150%! a 150% f** %! in one day. there is use to be a jail time for such thing. it use called pump and dump. not anymore. there is use to be a jail time for front running-not anymore.
    dark pools,subpenny,quote stuffing-you name it-they have it. no wonder that the people feel..well...cheated.. and many of them just left. right now it's impossible to find a decent quote provider,news provider for a reasonable for retail trader price. cause all sources of information are closed now. they either closed or priced so redicously high that you not going to buy it anyway. do you remember times,when all T&S data from island was free to anyone? that was back in 2000. now -you have to pay a separate subscription PER CUSTOMER,PER account per ECN and so on. i mean-they did everything they could to discourage people from trading. the outcome was pretty predictable..they(namely SEC and exchanges) should do exact opposite. why retail,prop trading was all over the place back in 90's? cause for once(not for long doh) rules are tilted in a favor of public.
    you need few things to get that volume back-make it easier to trade for everyone. i mean-EVERYONE. it's ok to gamble and buy a lottery with few last bucks,but it's not ok to trade stocks,if you have less than 25-30K on your account. wtf was that? where is the f** logic? you need economy running up,so we have more stocks(companies to trade), you need more transparency(more consolidation,not the mess that we have now with 80+ market centers\trading venues). less of them-better\easier control. many of them are simple steps,that aren't require anything at all. i mean-literally-the cost is zero.just an order from SEC. PDT,subpenny just to name of few. if they want the volume back-they have to make trading attractive for general public. yes,like a big f** casino,but you can trade from home with last few bucks that you have on your credit card :)
    and! also support US economy by injecting your own savings into it(well,we know that the last part isn't' really true,but whatever works :)) nah...last part is just too much,but you got the idea
  7. zdreg


    from bob111
    " few days ago one guy said on seeking alpha-i long CBMX and here is why i think it will double before month ends. stock shoot up 150%! a 150% f** %! in one day. there is use to be a jail time for such thing. it use called pump and dump. not anymore. there is use to be a jail time for front running-not anymore."

    the above never fitted the legal definition of pump and dump.

    also but not always pump and dump occur in non marginable stocks where shares cannot be not be borrowed and sold short. of course market makers are exempt from these rules with the excuse they are maintaining an orderly market. then the stock collapses and mm live in multi-million dollar homes.
  8. This statement is true and false I think. Years ago, human market makers couldn't win every single time. Some computer programs can today. How does a trading house not lose on a single day in a quarter - what kind of legal edge is that? Don't forget that human MARKET MAKERS were also put out of business by computers.

    Today is much like strip mining the oceans with drag nets killing everything in its path. Years ago, there were lots and lots of sardines and a few whales feeding. Now there are far less sardines and mostly whales competing for what is left of the food. I don't think this has occurred in the past and I see no way to healthy seas again for some time.

    I am interested in your opinion Z. Can you say that nothing is different about computer specialists and human specialists? If this period is just typical of what markets go through, then what time zone (decades) is it most like?

    I can say that I have only been in markets since the early 80s and I have seen no time like it before. Can you verify that this is just a phase and all will come back again? If so, what is a mechanism that you think creates a healthy ocean - no sardines and 5 whales that gets back to millions of sardines and 5 whales again?

    Do you say that the market is very healthy and has lots of food for all of us still?
  9. So true. Institutional sales guy at Merrill in Chicago that I've know for years is making half his pre-2008 monies and is downsizing. Guy in Tahoe who works for GS in San Francisco has to sell his house and relocate back to Bay area.
  10. jem


    maybe wall street will get smart and allow the sec to re-integrate the markets.

    there should be one place to get the best quote even if there are many "exchanges".
    #10     Feb 26, 2013