Investment Banking Trader - what risk capital you get to trade with ?

[ETJ]

Dodd-Frank pretty much-killed flow trading. Plus the US markets are too numerous and not fragmented as much. Flow trading is mostly done in Europe by prop firms, but it's a much diminished business today.

 

[TrAndy2022]

Dodd-Frank pretty much-killed flow trading. Plus the US markets are too numerous and not fragmented as much. Flow trading is mostly done in Europe by prop firms, but it's a much diminished business today.

Exactly, that is what I thought too.

 

[MrMuppet]

what are you guys talking about?
Are you really comparing FX - Dealers with shithole bucket shops and trader funding programs?

These are two entirely different businesses. Banks are making markets around a global asset portfolio with more or less fixed profit margins derived from regulation. Everything is automated and last look is in use.

There is no such thing as trader who gets x amount of money to play with. You get delta/vega/gamma and rho limits, your inventory priorities and then you can axe your quotes, that's it.


The other stuff is just gambling for hopeless retail

 

[longandshort]

what are you guys talking about?
Are you really comparing FX - Dealers with shithole bucket shops and trader funding programs?

These are two entirely different businesses. Banks are making markets around a global asset portfolio with more or less fixed profit margins derived from regulation. Everything is automated and last look is in use.

There is no such thing as trader who gets x amount of money to play with. You get delta/vega/gamma and rho limits, your inventory priorities and then you can axe your quotes, that's it.


The other stuff is just gambling for hopeless retail

Tbh it was kind of funny to read what they think happens at a bank.

 

[Nighthawk]

what are you guys talking about?
Are you really comparing FX - Dealers with shithole bucket shops and trader funding programs

I had a good laugh here.

FX Dealers and prop shops are not even close to compare. Most of the FX dealing business is DELTA NEUTRAL at EOD (end of day).

The flow is working nowadays much more different than 30 years ago. Most of the "flow" is automated. I wouldn´t even call it "flow" anymore. It is a fight of algos.

Real flows from corporates/fund business/asset manager business coming only after large macro figures.

One of the private entities that is killing "IT", is XTX Markets : https://www.xtxmarkets.com/ managed and owned by former Deutsche Bank quant trader Alex Gerko.

Alex is a master of his profession. Not to compare with ANY of the "smart quants" working at Tier1 nowadays. XTX Markets is meanwhile number 3 in FX liquidity/market making after JP Morgan and Deutsche bank in Europe.

And they make a SHIT LOAD of $ every week, every month, every year since inception. So much money that they meanwhile have expanded into other quant driven market making in other markets.

Oh by the way: we are executing 2,3 Trillion per year in FX Markets....

 

[murray t turtle]

Mar 6, 2023



Goldman’s Top Equity Trader Whose Pay Rivaled CEO’s Makes Surprise Exit
Sridhar Natarajan, Bloomberg News


(Bloomberg) -- Goldman Sachs Group Inc. is losing stock-trading rainmaker Joe Montesano, a key player in its ascent to the industry’s No. 1 rank in equities for two straight years.

The 46-year-old recently informed the firm he is stepping down as head of equities trading for the Americas and leaving to take a break, according to people with knowledge of the situation. He has yet to line up another job.

He’s among a group of top producers at Goldman whose pay has rivaled the more than $75 million awarded to Chief Executive Officer David Solomon over the three-year Wall Street trading frenzy set off by the pandemic. In 2021, Montesano even out-earned Solomon’s $35 million package, nudged ahead by his global oversight of the bank’s lucrative program-trading business, the people said, asking not to be named discussing confidential information.

The program-trading desk generated more revenue per employee than almost any other team at the investment bank that year. And the firm’s broader equities business pulled ahead of JPMorgan Chase & Co.’s and Morgan Stanley’s in both 2021 and 2022, with cumulative revenue of almost $23 billion.

The business is expected to slow down this year with analysts expecting an additional decline of roughly 6% in equities revenue at Goldman. That would still leave it substantially higher than what it was posting before the pandemic.

A company spokesperson declined to comment.

Montesano joined Goldman in 1999, the same year it went public, working for a subsidiary, Hull Trading, known for quantitative- and technology-driven strategies. He bounced around various equities posts before snagging the top US-based equities-trading job.

What Goldman calls program trading is better known in the industry as an index-rebalancing business. It develops systems to predict which stocks will be added or knocked out of benchmarks because of mergers, earnings growth or slowdowns. That business had breakout years in 2020 and 2021 before cooling.

To keep ahead of rival banks and vie with the world’s most sophisticated hedge funds in that arena, Goldman assigns traders and coders to help develop mathematical models and software tools that it uses to deploy its own capital. Traders on the team are compensated with an eye on keeping them from being poached by other banks or buy-side shops, making it one of the most envied spots at the firm.

%%
Unusual, to let someone under CEO to out earn CEO.
I dont know , so did duck duck go + average IB salary-$118,000;
a lot of that bonus, profit sharing.
I just thought of a time I asked a good client for a $$ bonus @ Christmas, TR Andy
I seldom do that+ most of my clients did not make what he did.
TR Andy/ try that , worked well [Plenty of advance notice TR Andy/ I did that DEC
Sure it helped+ I did good work for him+ his family liked me/ so every little bit helps.
A lot better than the smoked turkey some give + that' $ good also.[No disrespect to TurkeyLOL]

 

[gtan78]

In Banks, there isn't a concept of capital at the trader level.

Agency / execution traders have their own parameters and take very little to no risk.

Traders with mandates to take discretionary positions have limits such as a MTD or YTD stop or even more granular like daily stop limit. These are all dollar values.

Stops are a function of the targeted revenue/budget expected of a trader.
E.g. someone who is expected to make 10mm will have a budget of say 4mm mostly around 40%.

Banks generally do not worry about margins etc unless it is a bilateral trade where that is the ability to trade with other counterparties.

Other limits are position limits per product or tenor if trading rates products or even country or sector risk, these are to reduce impact of drawdown from particular product or segments etc.

 

[newwurldmn]

In Banks, there isn't a concept of capital at the trader level.

Agency / execution traders have their own parameters and take very little to no risk.

Traders with mandates to take discretionary positions have limits such as a MTD or YTD stop or even more granular like daily stop limit. These are all dollar values.

Stops are a function of the targeted revenue/budget expected of a trader.
E.g. someone who is expected to make 10mm will have a budget of say 4mm mostly around 40%.

Banks generally do not worry about margins etc unless it is a bilateral trade where that is the ability to trade with other counterparties.

Other limits are position limits per product or tenor if trading rates products or even country or sector risk, these are to reduce impact of drawdown from particular product or segments etc.

this is how we operated and the bank charged us for balance sheet. So if you buy a stock, you are paying a borrow fee for those funds.

 

[gtan78]

I should have added. Funding positions do affect your pnl. I.e. buying and holding securities as pointed out above. Or shorting securities and having a repo to fund.

Fx trades are funded with swaps.