5 ms·

It really isn't only managers. Basically any trader/IB person expects a bonus if the had a good year and they don't particularly care about the whole company's

It really isn't only managers. Basically any trader/IB person expects a bonus if the had a good year and they don't particularly care about the whole company's profit situation as long as they know they made money. People still don't really seem to be aware of the fact that in a big bank you can have 5-6 people outside of management positions earning more than some of the C level employees. Example: You have a credit trading desk and an equity trading desk. Your equity trading desk makes 1 billion, your credit desk loses 2 billion. Sure, you lose 1 billion in total, but you still pay the equity desk the bonus on the 1 billion profit.

fabian2k 4y ago
And those bonuses have been criticized in the past as well, and might get even more scrutiny now again. I'm not particularly convinced by the arguments for the necessity of these bonuses (at least not at this magnitude). If you pay me to gamble in the casino with my employer's money, and I get a bonus when I win and only my base salary when I lose, that doesn't seem to make much sense.
- mamonster 4y ago
  Well, the catch is that most people who blow up will never again smell a high paying job in finance. It's not like 9/10 of the people who blow up just restart the casino at another firm, they simply never see the trading floor again except for what they do in their personal account.
  - expertentipp 4y ago
    > they simply never see the trading floor again Who maintains this blacklist, is there a way to preview it?
    - SvenL 4y ago
      I think the normal process is to check the cv and ask any previous employer about performance.
      - expertentipp 4y ago
        With such a due diligence in hiring how come all these catastrophes keep on commencing...
        brianwawok 4y ago
        As an individual trader, you are incentive to be risky. Take a big risk and make your company go bust? Maybe you lose a job. Take a big risk and make 1B? You are getting a fat bonus check.
      - nradov 4y ago
        No. Previous employers do not release any information about a trader's results. The only way that hiring managers can find this information is through personal contacts (or news stories if the blow up was really spectacular).
- Hermitian909 4y ago
  > I'm not particularly convinced by the arguments for the necessity of these bonuses (at least not at this magnitude) Constraining bonuses like this is only achievable via collective action. Top performers in highly leveraged positions really do generate outsized returns. There are definitely people in certain positions who "take their margin with them" and so firms compete by offering that individual a higher percentage of the margin they generate and the nature of markets mean anyone who doesn't compete "loses". You need a collective action mechanism (government) and the only solution we've ever seen in practice is a high marginal tax rate. Companies are less willing to pay exorbitant sums being taxed at 94% and individuals fight less for them.

fabian2k 4y ago

And those bonuses have been criticized in the past as well, and might get even more scrutiny now again. I'm not particularly convinced by the arguments for the necessity of these bonuses (at least not at this magnitude). If you pay me to gamble in the casino with my employer's money, and I get a bonus when I win and only my base salary when I lose, that doesn't seem to make much sense.

mamonster 4y ago
Well, the catch is that most people who blow up will never again smell a high paying job in finance. It's not like 9/10 of the people who blow up just restart the casino at another firm, they simply never see the trading floor again except for what they do in their personal account.
- expertentipp 4y ago
  > they simply never see the trading floor again Who maintains this blacklist, is there a way to preview it?
  - SvenL 4y ago
    I think the normal process is to check the cv and ask any previous employer about performance.
    - expertentipp 4y ago
      With such a due diligence in hiring how come all these catastrophes keep on commencing...
      - brianwawok 4y ago
        As an individual trader, you are incentive to be risky. Take a big risk and make your company go bust? Maybe you lose a job. Take a big risk and make 1B? You are getting a fat bonus check.
    - nradov 4y ago
      No. Previous employers do not release any information about a trader's results. The only way that hiring managers can find this information is through personal contacts (or news stories if the blow up was really spectacular).
Hermitian909 4y ago
> I'm not particularly convinced by the arguments for the necessity of these bonuses (at least not at this magnitude) Constraining bonuses like this is only achievable via collective action. Top performers in highly leveraged positions really do generate outsized returns. There are definitely people in certain positions who "take their margin with them" and so firms compete by offering that individual a higher percentage of the margin they generate and the nature of markets mean anyone who doesn't compete "loses". You need a collective action mechanism (government) and the only solution we've ever seen in practice is a high marginal tax rate. Companies are less willing to pay exorbitant sums being taxed at 94% and individuals fight less for them.