As the following chart showing the collapse in trading revenue across the banks who have reported Q1 earnings so far shows…
… it has been a very bad start to the year for America’s largest, too big to fails/too big to prosecute.
It has been just as bad for bank employees, but while most US banks have seen the occasional drib and drab here and there, nothing compares to Barclays, which in the past 4 months has fired a stunning 8,000 workers.
But while in 2016 the pain is prevalent, as many traders are scared the next round of pink slips may just cost them their job, it’s not all doom and gloom especially when one recalls that, on average, most traders are paid far better than 99% of all other jobs.
And some are certainly more equal than others.
Below we present a breakdown of the highest paying trading jobs, based on an analysis from UK-based Emolument, which has examined London traders’ salary and bonus data at Director level to provide a glimpse into their remuneration profiles. As expected, dealing with more complex financial products provides the best pay. Across every single trading desk, traders receive bonuses that range from 40% (repo traders) to 113% of their annual salary (flow rates traders).
Some other findings:
- Traders specialising in products with a relatively low level of complexity, executed mainly via automated trading systems are paid the least, still totalling an impressive £221,000 annually.
- Predictably, trading in exotics, some of the most intricate products available, relies heavily on highly sophisticated and technical traders.
- Being paid 1.7 times more than more straightforward repo products traders makes up for the extra stress and hard work.
At the end of the day, it’s all about the bonuses:
Across all trading desks, basic salaries are in a similar range. Bonuses is where the real gap occurs. Highly incentivised, trading Directors on an exotics desks will expect a bonus roughly equal to their annual salary, while repo traders are likely to earn bonuses totalling 50% of annual salaries only.
Alice Leguay, COO & Co-Founder at Emolument.com said: ‘Automation is coming to finance – artificial intelligence, robotics and new disruptive technology are taking over some of the traditional trading functions. We have seen many flow credit and flow rates trading desks being made redundant as banks are under pressure to adopt these new automated solutions in order to cut costs and boost efficiency. For now, the more complex and high value tasks are safe and well rewarded and we do need the human touch in the work place, but there is no telling what technologies will be available to trading floor staff in the coming year. Traders should focus on constantly developing their technical skills and concentrate on high value tasks in order to make themselves indispensable.’
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So for all those traders who still demonstrate a unique skillset (can make money and don’t spend 8 hours a day on twitter) congratulations: you may be in luck for a few more years. For all those others who are about to lose their jobs to Johnny 5 or some malfunctioning Secaucus-based vacuum tube, or a pimply 22 year old Math PhD, our condolences: McDonalds is hiring.
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