2014 will not be a good year for fixed income trading bonuses. So says Johnson Associates, the New York-based consultancy firm. Could this be why David Sobotka, global head of fixed income trading at Bank of America is said to be stepping down before the end of the year? – And before bonuses are paid?
Johnson Associates thinks fixed income bonuses will be down by up to 10% this year (compared to an increase of up to 15% for M&A and ECM bonuses). Sobotka may therefore not be hopeful of getting paid, despite presiding over an 11% rise in fixed income currency and commodities (FICC) revenues in the third quarter. Alternatively, he may simply be tired of waiting for the fixed income business to rebound. – Barclays’ FICC researchers just issued a report suggesting that September’s recovery in volumes was an anomaly rather than the start of the FICC revival. Bloomberg says Sobotka is contemplating teaching economics, or working for a non-profit.
Separately, while Barclays’ FICC traders despair of their research colleagues’ prognostications on their futures, Barclays’ equities traders can despair of the ongoing problems with the bank’s dark pool. When Barclays’ announced its third quarter results on October 30th, it said the dark pool nastiness was in the past- equities clients in the U.S. were reportedly flooding back to the Barclays waters.
Unfortunately, that optimism may have been misplaced. Data from the Financial Industry Regulatory Authority shows that the volume of shares traded in Barclays’ dark pool fell 33% in the week to October 20th, the most recent for which information is available. This is bad news. Barclay’s blamed the third quarter drop in its equities revenues on its dark pool difficulties and said they had spillover effects on its equity capital markets business. At the time of its results on October 30th, it said these issues were behind it. Volumes suggest otherwise. – Unless the recent decline is due to undesirable high frequency traders exiting the pool and desirable hedge funds and other investors jumping back in.
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