Interdealer brokers' big appeal: bonuses

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Interdealer brokers are doing ok.

Last week ICAP said it was on track to meet analysts' full year profit forecasts and that 2008 revenues rose 36% year on year. It's also hired a portfolio trading team from UBS.

Other interdealer brokers (IDBs) have been hiring too - Mint equities hired four for its fixed income desk and Cantor Fitzgerald is said to be looking for 100 people for its US fixed income business, 25 of whom will be investment bankers.

If IDBs want bankers, bankers want IDBs. UK-based recruiters say interdealer brokers are suddenly appealing as employers because they're not bonus-constrained in the way that most banks now are.

"Some brokerages are offering to employ people on a commission-only basis with a 50-50 split on what they bring in," says Tej Dhindsa at recruitment firm Ingram Mayet.

"Interdealer brokers are still paying good bonuses," says another IDB-type recruiter. "But they don't want to broadcast it too loudly because they know it will hack-off their banking clients."

Nevertheless, the bonus potential at IDBs hasn't gone unnoticed. "Traders and salespeople at banks who were on total compensation of 1.2m are now earning a base salary of 120k and thinking they won't get a bonus for the foreseeable future. "Moving to a commission-based package at an interdealer broker is now appealing," says Damien Lee of recruitment firm Search Partners.

Despite this, most IDB packages don't seem particularly immense. Although top performers earn six figure multiples, Dhindsa says the average is more like 3-4k a month.

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