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Morning Coffee: Ex-Barclays traders shine light on bank’s murky waters. Early predictions for 2015 bonuses

Deep in the dark pool

Deep in the dark pool

At this rate, Barclays may never want to part company with disgruntled traders again. As of yesterday, the British bank – supposedly purged of all nefarious elements by chief executive Antony Jenkins – is being sued by the New York Attorney General for murky goings on in its ‘dark pool‘.  The Financial Times reports that ex-Barclays traders are working with the Attorney General to bring the case against the bank.

The nub of the complaint is that Barclays presented its as a crystalline pond, when it was in fact a fetid mire. Investors were told they were diving into, “safe waters,” said the New York Attorney General, “but Barclays’ dark pool was full of predators – there at Barclays’ invitation”. The largest of these predators was Tradebot, a U.S. high frequency trading firm whose presence Barclays purposefully omitted from marketing documents because it had classified the firm as ‘toxic’. The British bank also deliberately misled investors about the proportion of client orders routed through its dark pool – two directors altered statistics in a client presentation to say that 35% of orders went through the black waters, instead of the 75% reality. Bloomberg reports that some traders objected to the misleading marketing documents, but that head of product development said accuracy wasn’t a priority –  it was simply about showing clients the pool was monitored. “Yes, U smart!”, Barclays’ head of equity sales reportedly responded, enthusiastically.

Separately, international search firm Options Group has contrived some predictions for bonuses paid in 2015. Loosely, it thinks that investment bankers will do well and that traders won’t – unless they’re trading equity derivatives. Options predicts that investment bankers in both Europe and the US will see a 15% increase in their pay for 2014 and that rates traders will see their pay fall by a further 18%. Pay for equity derivatives traders is expected to rise by 18%, and pay for cash equities traders is expected to rise by 8-11%. Why are equity derivatives traders in line for a such a big hike? “It’s very tough to hire great traders and great salespeople in equity derivatives,” said Options Group CEO Michael Karp. “It’s a low headcount, high-profit business, so you have to retain talent.”

Meanwhile:

Goldman Sachs has been merging its M&A groups. (Bloomberg) 

Citigroup has a secret prop trading team run by a Bulgarian trader with a $1bn book. (Bloomberg) 

Citigroup just hired Anthony Diamandakis, a key financial sponsors banker from Credit Suisse. (Financial News)

RBC has just hired a new head of sterling rates trading (Andrew Graham) and a new head of sterling inflation trading (Neil Weatherall). (Financial News)

Deutsche Bank is a particularly unequal place to work. (New Financial) 

RBS says it has contingency plans for the effects of a Scottish ‘yes vote’ this autumn. (The Times)

Fred Goodwin delighted in doing loop-the-loops at speed to let off steam. (Herald Scotland) 

No investment banker or trader would put up with not getting a salary and making only whatever business he can bring in by cold-calling. (BloombergView)

If you want to build a career in finance, it might be a good idea to get a CFA and a master’s degree first. (Financial Times) 

M&A bankers charge $40-$50m even when deals don’t go ahead. (Reuters) 

Admiral Insurance shows banks how to throw a staff party. (Professional Adviser)

Related articles:

The new best investment bank to work for in Europe? Here’s who Goldman’s hiring now

What it’s really like to work 100 hours a week in banking. 14,000 applications for bureaucratic finance jobs

Beware hedge funds dangling unattainable pay packages. Last man standing promoted at Citi

 

 

 

 

 

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