Wall Street Traders May See Smaller Bonuses This Year


Wall Street traders, usually among the best-paid employees in the industry, may see drastic cuts in their take-home pay, Bloomberg News said.

Revenue in trading divisions has fallen by an average of 12% so far this year. Goldman Sachs (GS), which makes most of its money from trading, saw average compensation drop 26% in the first nine months of this year.

New regulations and public scrutiny mean that the days of huge trader bonuses may be gone for good.

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"The industry will be significantly less profitable going forward, also significantly less risky," said Douglas J. Elliott, an economics fellow at the Washington-based Brookings Institution and a former JPMorgan Chase & Co. banker. "The lower profitability means there will be less net revenue to distribute between the shareholders and the employees. I do think there will be a squeeze on compensation over time."

In the world's top eight banks, average pay per employee has dropped by 0. 8%. For banks that focus on trading, it has dropped 11%. Bond traders could see their compensation fall as much as 30% this year, according to consultants Johnson Associates.

"There's been a drop-off in activity -- predominantly around client volumes and related trading flows -- that has impacted the revenues," said John Lee, a New York-based partner at recruitment firm Heidrick & Struggles International Inc.