A few weeks ago, FX traders in London were daring to hope. Yes, the prospect of fines related to FX fixing loomed, but thanks to September's increased volatility they'd actually made some money. With bonuses approaching, there was reason to be hopeful. Now there's no hope at all.
"Until September, FX had a really really tough time of it," says the head of one FX-focused search firm in London, speaking on condition of anonymity as his is a 'sensitive area'. "But then people started making money. In the vast majority of cases, those individuals were the traders and usually the spot FX traders - they did very, very well. But this has clearly thrown everything up in the air. Now it's uncertain whether they'll get paid at all."
Most people would say FX traders don't deserve to get paid anyway. Regulatory transcripts showing a UBS trader stating, "that's why I got the bonus pool" after making a $513k (£323k) profit from manipulating the fix price, would seem to suggest they deserve zero. Indeed, regulators seem determined to ensure that FX bonuses are diminutive. FCA chairman Martin Wheatley said yesterday that banks will be forced to review their bonus plans for 2014 and to clawback payments already made. Meanwhile, Swiss regulator Fimna has capped bonuses for UBS's FX and precious metals traders at 200% of salaries for the next two years.
In defence of their clients, headhunters point out that the fixing took place between January 2008 and October 2013 and that banks have been busy cleaning up their business practices ever since. RBS, for example, appointed Tim Carrington as co-head of global FX trading in May 2013. One FX focused headhunter (also speaking off the record) says Carrington has been instrumental in combing through RBS's wrongdoings: " "He's done a sterling job of getting RBS fit for purpose in the new environment. All wrongs from the past have been expunged."
It's not only FX traders who face an uncertain future. The head of a fixed income search firm in London (also, unfortunately speaking on condition of anonymity) said the fear now is that banks will cut more senior staff across the entire fixed income sales and trading business before bonus time. "There's no money to go around. Banks are going to be looking at protecting the bonus pool and getting rid of a few more MDs before the new year."
As we've reported before, RBS has a large number of senior traders on its books - particularly in rates trading. However, it's lost several senior traders in the past few months. Mark Burke, former co-head of sterling interest rate derivatives and UK gilt trading, left the bank after 17 years in August 2014, Mark O'Reilly, a gilts trader left after at least 13 years in May. Gerald Barrett, a former head of US dollar and cross currency rates at RBS was said to take a sabbatical in April, but the FCA register suggests he left the bank in May.
FX headhunters said the current upset in the FX market is unlikely to encourage a spate of moves across the market. With the possible exceptions of Nomura and RBC Capital Markets, nowhere's really hiring. And in any case. job-searching behaviour has changed, said one. "People don't make knee-jerk reactions about their careers any more.[efc_twitter text=" It's not about looking for something new if you don't get paid for one year - that was pre-Lehman behaviour. "]Now it's about keeping your head down and sticking with the devil you know. People will only really look if they're punished three years running."