Equity traders are predicted to receive substantial bonus increases this year, with payouts potentially soaring nearly 14 per cent above last year’s levels. This jump would bring bonuses for equity traders to their highest point in a decade, contrasting with a more modest average increase of 2.9 per cent for fixed-income traders globally, according to a report by recruiting firm Options Group. Investment bankers can also expect a significant boost, with bonuses potentially rising by about 12 per cent, also marking a decade high. Options Group is a recruiting firm specialising in the financial services sector, providing insights and data on compensation trends and talent acquisition.
Michael Karp, Options Group’s chief executive officer, highlighted the competitive landscape, noting the need for banks to adequately compensate employees to prevent them from being poached by private equity, private credit, and other institutions. The report aligns with a previous forecast by New York State Comptroller Thomas DiNapoli, who anticipated record-breaking Wall Street bonus pools, fuelled by strong profits among New York Stock Exchange firms.
In the United States, equity traders benefited from market volatility spurred by trade tensions and economic uncertainty. For example, Morgan Stanley’s stock traders achieved their best third quarter ever, with revenue surging 35 per cent to $US4.12 billion. A rebound in dealmaking also buoyed investment bankers, with mergers and acquisitions exceeding $US1 trillion by early June, a 30 per cent increase from the previous year.
However, Wells Fargo & Co analyst Mike Mayo noted that surging revenue does not directly translate into proportionally higher banker bonuses as it once did. While compensation is likely to increase significantly, the rise will not match the degree of revenue growth and will be more selectively distributed by department and employee. US banks are expected to begin compensation discussions in the coming weeks, with bonuses scheduled for distribution early in the new year. Options Group’s report is based on data collected from January 1 through early November.
