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It's been a great year for some. In those corners of the market, bonuses and hiring reflect that.

"Some traders in banks have made $100m in profits this year"

While the financial services job market is mostly looking pretty lacklustre at this advanced stage of the year, it's not all decrepitude. Some corners of the market are still pretty wild. 

Rates desks in particular have had an epic run in 2022. Deutsche Bank's rates trading revenues more than doubled in the third quarter. At Barclays, macro revenues (emerging markets rates and FX) were up 93%, driven by what the bank described as "volatile markets."

That volatility is likely to continue. "The macro environment is looking good for the next two years," says one headhunter working on rates trading hires in London and New York. "Everyone's making money off volatility and rate hikes. This isn't a short term crisis that will be gone in a month's time."

Hiring is thriving as a result. "We're a lot busier than we'd normally be at this time of year," says the headhunter. "The feeling right now is that the opportunity cost of waiting to hire until the first or second quarter of 2023 exceeds the cost of buying out someone's bonus."

Deutsche is among the banks still adding staff. The German bank recently recruited former Natwest trader Patrick Maber in rates structuring, for example, having just promoted Panos Stergiou as global head of the institutional clients group and co-head of FIC structuring. 

Back in February, Bloomberg reported that some rates traders were doing well. Gil Holmes, an MD in inflation trading at JPMorgan reportedly helped generate $300m in PnL in 2021. This year, sources say that feat has been repeated across the industry, with many individual rates traders generating profits of $100m+. The promotion of Frederik Baba, head of rates systematic market making, to partner at Goldman Sachs earlier this month, was the likely result of strong performance.   

Big profits should mean big bonuses. The new compensation report from Options Group, the Wall Street talent acquisition and development firm, based on data collected through to November, predicts that total compensation on rates desks will rise by 10.5% this year after falling 8.2% last year. Compensation for credit salespeople and traders, by comparison, is expected to fall 11.2%. The biggest increases are expected in FX and commodities.

Traders with $100m in PnL will only receive a small proportion of that in pay when they work for major banks. Three to four per cent is usually the maximum. "Banks don't pay like hedge funds," reflects Options Group CEO Mike Karp.

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AUTHORSarah Butcher Global Editor
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