The writing was on the wall six weeks ago when initial compensation projections first hit the wire. Equities staffers and investment bankers (outside of M&A) were in line to celebrate a strong 2013. Bond and commodities traders, meanwhile, were sure to suffer come bonus time. Now, following a vibrant market rally and a late rush of IPOs over the final two months, the pay gap between the haves and the have-nots is only widening.
The Wall Street Journal is reporting that equities traders and investment bankers are getting a “last-minute boost” to pay packages that were already expected to be some of the most bountiful on the Street. Recruiting firms Options Group said last month that average compensation in equities and investment banking would jump 12% and 6%, respectively, year-over-year, so you can expect those numbers to only rise.
Meanwhile, bond, currency and commodities traders didn’t see any end-of-year windfalls, despite the Fed’s easing of stimulus funding, meaning the 15% drop in fixed income compensation first estimated in November will likely be a reality. Who knows – it could even be worse than originally anticipated.
Looking bank-by-bank, Goldman Sachs and Citigroup bankers expect their total comp pool to remain relatively flat, according to the Journal. Stock traders and brokers at Morgan Stanley, a firm having a banner 2013, anticipate a bump in pay, unless of course you’re working in fixed income. Compensation at J.P. Morgan is rather up in the air considering its scandal-plagued year that cost the company billions in fines.
BarCap Missing Paperwork (WSJ)
Barclays Capital was fined $3.75 million for failing to properly preserve electronic records for at least a decade. Copies of some email attachments and instant messages were also not kept.
Robert W. Wilson, retired founder of hedge fund Wilson & Associates and a renowned philanthropist, died this week following from an apparent suicide. He was 87.
Safe Landing (Bloomberg)
Hedge fund Moore Capital Management has reportedly offered positions to money managers who are being displaced from SAC Capital following the closing of its London office. Several equities and macroeconomic traders are expected to join Moore as soon as next week.
BTG Hiring Globally in Commodities (Financial Times)
Brazilian bank BTG Pactual is set to add 100 commodities staffers to its London office in the coming year. The bank is also setting up commodities hubs in São Paulo, Singapore, Geneva and Stanford Connecticut.
The ‘Kill Switch’ (Reuters)
Exchange NYSE Euronext has filed an interesting plan with regulators aimed at preventing a recurrence of the Knight Capital trading nightmare, among similar fiascos. The idea is to give member firms – big market-moving companies like Knight – the option to set trading thresholds that when breached would block a firm from executing additional orders. Firms would be sent alerts when their exposure limits are tested.
Economy Turning the Corner? (WSJ)
U.S. jobless claims fell well more than forecast last week in the latest sign of an improving economy. "It's a holly, jolly data Christmas…as all signs point to an accelerating economy," said one economist.
Buzz Around the Office
Two out of Three (HuffPo)
A South Carolina man was arrested this week after cops found two-thirds of the mythical gifts of the Biblical wise men – frankincense and myrrh – in his car. The problem was the third substance wasn’t gold. It was marijuana.
Quote of the Day: “Christmas is the time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want and their kids pay for it.” – Richard Lamm