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Equity Traders’ Bonuses Seen Rising as Rates Salesmen Face Drop

New York Stock Exchange
Pedestrians pass in front of the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg

Compensation for Wall Street’s equities salesmen and traders is expected to rise in 2013, while total pay for employees in fixed-income units may drop 10 percent, according to recruitment firm Options Group Inc.

Equity-derivatives traders and salesmen globally may get a 19 percent increase in compensation, the most among categories detailed in a report this week by New York-based Options Group. Workers in both interest-rates trading and securitized products may see a 19 percent drop in pay, according to the report.

The largest investment banks cut the amount set aside for compensation so far this year amid investor pressure to improve profitability. Average compensation probably will climb 4 percent, driven by increases at smaller banks and boutique advisory and investment firms, according to the Nov. 11 report.

“It has been a very challenging operating environment for the past four consecutive years, and each bank has chosen to invest more in some areas and scale back in others,” Options Group Chief Executive Officer Michael Karp said in a statement. “Bulge-bracket banks used to consistently pay higher than other sell-side firms, but this is no longer the case.”

Total pay within equity-trading units probably will rise 12 percent, as investment-banking and wealth-management groups globally each get 6 percent increases, according to the report.

Workers in foreign-exchange trading will see the only average increase in compensation among fixed-income units, with a 2 percent climb. Commodities employees face a 13 percent drop, with declines of 11 percent in emerging markets and 7 percent in credit.

Options Group’s report reflects compensation for the top 25 percent of workers in each area, excluding the top 1 percent. It’s based on research conducted year-round and interviews with senior industry executives, according to the statement.

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