Traders are amongst the best paid finance professionals. Vilified in the press, their hubris is said to have caused much of the financial market turmoil in recent years. Don’t we love to hate them? Notoriety and intensely stressful hours on the trading floor requiring nerves of steel and a strong political backbone (for those working in many of the larger banks). Despite it all, is the financial reward still worth aiming for a trading career? If so, which is the most lucrative route?
Emolument.com has examined London traders’ salary and bonus data at Director level to provide a glimpse into their remuneration profiles. As expected, dealing with more complex financial products provides the best pay. Across every single trading desk, traders receive bonuses that range from 40% (repo traders) to 113% of their annual salary (flow rates traders).
|Exotics & Structured Credit||£ 185 k||£ 185 k||£ 370 k|
|Flow Rates Derivatives||£ 179 k||£ 173 k||£ 352 k|
|Flow Rates||£ 150 k||£ 170 k||£ 320 k|
|Exotics & Structured Rates||£ 160 k||£ 150 k||£ 310 k|
|Commodities Derivatives||£ 180 k||£ 120 k||£ 300 k|
|Equity Structured & Exotic Derivatives||£ 153 k||£ 145 k||£ 298 k|
|Flow Credit||£ 175 k||£ 120 k||£ 295 k|
|Equity Flow Derivatives||£ 150 k||£ 122 k||£ 272 k|
|Cash Equities / Multi Product||£ 153 k||£ 100 k||£ 253 k|
|Forwards||£ 150 k||£ 100 k||£ 250 k|
|STIR-MM/REPO||£ 156 k||£ 65 k||£ 221 k|
Figure1 & Table 1. Data from 254 Directors in London in 2015-2016
The Human Factor
Traders specialising in products with a relatively low level of complexity, executed mainly via automated trading systems are paid the least, still totalling an impressive £221,000 annually.
Predictably, trading in exotics, some of the most intricate products available, relies heavily on highly sophisticated and technical traders.
Being paid 1.7 times more than more straightforward repo products traders makes up for the extra stress and hard work.
Sky-high bonuses and where to find them:
Across all trading desks, basic salaries are in a similar range. Bonuses is where the real gap occurs. Highly incentivised, trading Directors on an exotics desks will expect a bonus roughly equal to their annual salary, while repo traders are likely to earn bonuses totalling 50% of annual salaries only.
Alice Leguay, COO & Co-Founder at Emolument.com said:
‘Automation is coming to finance – artificial intelligence, robotics and new disruptive technology are taking over some of the traditional trading functions. We have seen many flow credit and flow rates trading desks being made redundant as banks are under pressure to adopt these new automated solutions in order to cut costs and boost efficiency. For now, the more complex and high value tasks are safe and well rewarded and we do need the human touch in the work place, but there is no telling what technologies will be available to trading floor staff in the coming year. Traders should focus on constantly developing their technical skills and concentrate on high value tasks in order to make themselves indispensable.’