- Emolument survey of 254 director-level traders in 2015, 2016
- `Highly sophisticated and technical traders' rewarded most
Traders of exotic and complex credit products are the highest-paid in London, with bonuses that can be almost three times those awarded to some of their colleagues, a survey of salaries shows.
Employees at the director level who help clients buy and sell structured credit products and exotic credit derivatives take home about 370,000 pounds ($525,000), including bonuses of about 185,000 pounds, according to the research firm Emolument.com. Traders of repurchase agreements, or repos, and products tied to money markets receive the least, being paid 221,000 pounds, with bonuses of 65,000 pounds, the survey shows.
The survey shows the significant rewards on offer for those able to survive as traders of the most complex credit products, which contributed to the global financial crisis. Banks including Credit Suisse Group AG and Deutsche Bank AG are pulling back from some of these markets with regulators requesting they set aside more funds in case trades go awry, while revenue slumped across these industries last year as investors dumped risky products.
“Trading in exotics, some of the most intricate products available, relies heavily on highly sophisticated and technical traders,” London-based Emolument wrote in a statement. “Being paid 1.7 times more than more straightforward repo products traders makes up for the extra stress and hard work.”
Emolument surveyed 254 directors working as traders for banks in London in 2015 and this year, the company’s Chief Operating Officer Alice Leguay said.
Traders of flow rates derivatives are awarded 352,000 pounds on average, while those dealing with commodities derivatives receive about 300,000 pounds, the survey shows.
Traders of repos, a form of short-term loan, are paid the least because they deal in products with a “low level of complexity” that are traded mainly through automated systems, according to Emolument.
Still, high-risk products don’t always generate high profits. Credit Suisse lost almost $1 billion between late last year and the first quarter of this year when complex credit wagers soured. The losses prompted Chief Executive Officer Tidjane Thiam to exit some of the businesses and dump much of its holdings.
Revenue from all credit products tumbled 32 percent to $12.4 billion in 2015, the lowest since 2011, according to research firm Coalition Development Ltd. Sales from securitized products plunged 25 percent to $9.3 billion, the lowest since at least 2010, Coalition’s research shows.