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Interdealer brokers’ big appeal: bonuses

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.

Comments (12)

  1. 8 paragraphs of ludicrous conjecture. No respectable organization operates on a 50/50 commission split. A good inter dealer broker can easily earn in excess of 7 or 8 million a year.

    Pythagoras Head Reply
  2. This is a collection of dubious facts peiced together into a story with only the tiniest pinch of reality – there’s plenty of firms building out PT desks and that doesn’t mean Icap are going nuts on recruitment. And Tej – if you’re going to state the obvious you might as well at least be clear – 50% payout’s are the norm and IDB’s offer a draw rather than no base salary. Not the same thing.

    Thank heavens for the enlightning Damien Lee with his groundbreaking prophecies

  3. Couldn’t agree more with the comments.

    Cheddar Del G-Dunther Reply
  4. Not sure if I really agree with you Ted – as the contributor to the site already commented ‘50% payout’s are the norm and IDB’s offer a draw rather than no base salary. Not the same thing. I’d be interested if you can add some insight as to why you think this is Teddy, rather than just coming out with bizarre statements that aren’t based in reality

    The Sausage Kid Reply
  5. IDBs are hiring people from banks but only in very limited numbers. To earn a good living at an IDB, you need to have rock solid relationships with guys on the buyside who can throw you business.

    Pythagoras Head Reply
  6. Pythagorous, which IDB’s would you recommend as the best in the industry? I’ve heard that places like First Equity, Lakeview and Bastion are most people’s hot tips for 2009.

    Also, what would you say motivates you?

    Scouse Cube Head Reply
  7. I think your all missing what is actually happening out there, alot of bankers are not joining the established so called IDBs but setting up there own Agency Brokers , plenty of shops out there offering to clear/settle biz and to offer there balance sheets for a price! this where the growth is and the scope to earn greater than a 50% split.

  8. If you’re not going to take this serious Lucan maybe you should just go hom and leave the intellectual debate to the grown ups

    Pythagoras Head Reply
  9. “POT KETTLE” Pythagoras Head!

  10. Let me continue this so called intellectual debate, please outline to the readers why any so called person with a book of business would want to slave 12 hours a day to make the likes of Michael Spencer richer when one could just introduce the biz or start there own agency biz up.

  11. Dear Mr Lucan, I’m not sure how things work in your mystical rainbow world of financial services but down here on planet earth you leverage off client flows which increase the likelihood of matching buyers and sellers, therefore raising your income stream. That’s why Michael Spencer is one of the richest men in the City and you are leaving comments on efinancial careers using a retarded pseudonym.

    Do you really think the financial markets would function more effectively if every muppet with a few clients opened his own brokerage?

    You sir, are a complete chump and have a head like a cube

    Pythagoras Head Reply
  12. To the above contributor, whats all this mumbo jumbo about leveraging off client flows??? blimey the compliance people at these IDBS would go mad!
    I think the above contributor is trying to be the Jim Cramer/Hugh Hendry of E financial careers, FULL OF HOT AIR.

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