Top traders like to carry the air of an athlete – coached to their peak, cajoled into performance and superstitious when it come to winning streaks. If investment banking divisions attract academic over- achievers, trading floors have traditionally been refuges for those with entrepreneurial appetites for risk.
But there’s a new beast bothering investment banks’ traders – admin. “I am frustrated by the amount of compliance, the interference by other teams such as risk at unnecessary times,” says Simon, who works in equity derivatives trading for a bank in London. “I understand the industry is changing but it has moved too far and it prevents us from doing our jobs correctly.”
Electronification has drastically reduced trader headcount over the past 15 years, while regulatory intervention to clamp down on prop trading has forced traders out of the sell-side and into hedge funds. Those who remain in the relatively illiquid bond markets or on more complex products are working in a different world.
“A lot of the guys on the trading are earning a lot less, have been hit by a few waves of job cuts and are generally feeling quite frustrated,” says Simon James, a former rates salesman at Barclays who now runs ‘adventure running’ holiday firm Run The Wild.
In the wake of the financial crisis and following various studies pointing out the fallibility of human traders, you might have thought traders should just suck it up. But many are mourning the previous era without being able to leave.
“To me this was the only career path that seemed entrepreneurial without the risks of setting up your own business,” says Simon on his reasons for going into trading. “I find the rewards on average are too good to leave, because the risk is you leave to do something entrepreneurial or different and you end up doing a less fun job and earn less money.”
“I was made redundant during the financial crisis. My job was pretty great at the time, I was earning a lot and had an amazing team but when the crisis hit, all of that changed,” adds Omar, a trader in an investment bank in London. “We’re overworked and underpaid now. It’s just not the same.”
In the ever-hot fintech start-up space, and former financiers heading up these firms are often former traders. Bondcube, Algomi, Revolut, Shereit, Behavox, Squirrel – all are lead by ex-traders.
“Trading just wasn’t as fun as it used to be,” says Nikolay Storonsky, a former Credit Suisse equity derivatives trader who now runs Revolut. “It was very entrepreneurial, exciting and a meritocracy – if you made money as a trader, you were paid a percentage of the profits. These days, it’s a much more normal corporate culture and not as interesting.”
Traders now fall into two camps: those who feel underpaid but trapped into their current vocations – and that includes a move across to the buy-side, and those willing to take a risk and embrace their entrepreneurial spirit.
“It is a big risk giving up what is still a well-paid job for something that could take a long time to make money,” says James. “My hand was forced because I was made redundant, but we’ve managed to make a profitable business relatively quickly.”
As investment banks make attempts to shake-up culture, old school traders are feeling more isolated under the new regime. While the new, keen graduates who have been carefully instructed in the ethos of the firm are embracing this, some of the old guard are being left behind.
"It is changing amongst certain groups, some people are embracing the new normal, but many are not and it just makes them depressed," says Simon.
The so-called elite traders who excelled during the old regime are struggling to adapt and finding themselves increasingly frustrated, he suggests, but those who would have been mediocre performers when risk limits were stretched are embracing the new culture.
"Those who did not reach their full potential under the old regime where risk taking and revenue growth was the mantra are adapting to the new system," says Simon. "These people are enjoying the change in dynamic. It's giving them a second chance at succeeding under the new system, which is more disciplined and cost focused."