BrokerDealer Bonus Season a Bust?

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wall_street_bonus-gif-scaled-500Brokerdealer.com blog update courtesy of Kevin Dugan’s article from 9 January in the New York Post.

With record fines this year, brokerdealers are preparing to receive lower than average bonuses from their bosses.

Wall Street might have to settle for the second-best caviar this year.

After a year of record fines, sluggish trading and low interest rates, bankers hoping for richer payouts should prepare to be disappointed when bonus season gets underway next week.

By most estimates, the pool of money set aside for Wall Street workers is expected to be flat with the previous year, when the industry took home $16.7 billion, or an average of $164,530 per person.

Last year, big banks were slammed by billions in fines and penalties — Bank of America paid the largest fine ever for a single company, $16.7 billion — for offenses ranging from toxic mortgage securities to money laundering to tax evasion.

“The fines have come to roost,” said Michael Karp, CEO and co-founder of headhunting firm Options Group. “The bonus pool and compensation are the most vulnerable for banks to make up the shortfall.”

While the overall bonus pool is expected to be flat, there will be gains in some better-performing business areas. Investment bankers, private wealth managers and securitized product traders could see bonuses rise by more than 10 percent, according to a research report from Johnson Associates.

That will be offset by declines for credit and stock traders, the report said.

Layoffs across Wall Street should keep individual bonuses from sliding too much for those who still have a job, even for those working in areas with smaller bonus pools, Karp said.

Wall Street had shed 2,600 jobs through October of last year, according to New York State Comptroller Thomas DiNapoli.

Morgan Stanley is set to be the first bank to announce bonuses, on Jan. 15, sources said. The bank is expected to have some of the biggest payouts because of its focus on wealth management, which has exploded as wealthier clients give banks more money to manage.

Citigroup and Goldman Sachs are expected to announce bonuses the following day. Citi’s traders will see their bonuses slashed by 5 percent to 10 percent after a weak year, said a person familiar with the company’s plans. That’s worse than earlier estimates that had the bonus pool level with the previous year.

Goldman’s investment bankers could see some of the fattest payouts this year, as the firm pulled in the most business during the busiest M&A year since the financial crisis, according to Bloomberg data.

JPMorgan Chase is expected to announce bonuses during the last week of January, while European-based banks typically tell their employees in February and March.

Morgan Stanley, Citi, and JPMorgan declined to comment. Goldman didn’t return a call seeking comment.

BrokerDealer-Backed Consortium That Seeks to Boot Bloomberg Chat Adds to IT Arsenal via Sweet Sounding Acquisition by Supplanter Symphony Communications

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BrokerDealer.com blog update courtesy of prior reporting here and extract from Dec 1 WSJ story by Justin Baer.

chat serviceAn instant-messaging software company that has drawn investments from Goldman Sachs Group Inc. and other big banks signed a deal to buy a chat business from a potential rival.

Symphony Communication Services LLC acquired an arm of Markit Ltd., a financial-data firm that went public earlier this year, the companies said.

The purchase, Symphony’s first since a group of 14 banks and money managers helped start it in October, underlines how Wall Street has quickly coalesced around the Silicon Valley startup as a solution to one of the industry’s most pressing technology challenges: finding a way for employees to communicate with one another, instantly and securely.

It also represents an exit for Markit, which a year ago had launched its own messaging initiative for bankers and traders. The sale isn’t expected to have a material effect on Markit’s results. Fewer than 20 Markit employees are relocating to Symphony as part of the sale of the unit, known as Collaboration Services, a person familiar with the deal said. Terms aren’t expected to be disclosed when the deal is formally announced Tuesday.

David Gurle, Symphony’s chief executive, said in an interview that the company had considered building its own directory before reaching out to Markit in recent weeks to discuss a potential deal. In buying Markit’s business, Mr. Gurle said Symphony probably saved 18 months of development time. “They had a capability we would have ordinarily had to build ourselves,” Mr. Gurle said.

The transaction includes the software that powers Markit’s directory service, which functions as a centralized “phone book” for financial firms that can be customized to meet compliance rules.

Symphony’s emergence may help loosen Bloomberg LP’s grip on the securities industry. The financial-data company’s chat services remain ubiquitous on trading floors. But the price of a Bloomberg terminal, about $20,000 a year, has grated on some finance executives.

If Symphony’s platform spreads quickly through Wall Street, bank executives have said, it could pressure Bloomberg to relent. A Bloomberg spokesman didn’t immediately respond to a request for comment. Bloomberg’s news service competes with Dow Jones & Co., publisher of The Wall Street Journal.

On Monday, Mr. Gurle said the messaging platform is still on track to launch in July.

Led by Goldman, a group of financial firms invested $66 million in Symphony. The group, in turn, acquired Perzo Inc., a Palo Alto, Calif., company founded in 2012 by Mr. Gurle. Goldman, which led the investment among the financial firms, contributed its own internal messaging developments to the venture.

Founded more than a decade ago, Markit had drawn investments from financial firms such as J.P. Morgan Chase & Co., Bank of America Corp. , Deutsche Bank AG and Goldman. All four of those banks were among the firms that have backed Symphony.

Markit sought to allow financial firms’ in-house messaging platforms to communicate with one another, he said. Symphony and its backers are betting that financial-services firms need a better system than they could develop on their own.

To read the complete coverage, please visit the WSJ via this link.

Banks dangle Carrot to Future Broker Dealers

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Brokerdealer.com blog post made possible through the courtesy of the NYTimes and William Alden and Sydney Ember  

NYTimes Logo

 

Working on Wall Street once conferred a certain prestige, a path to riches and an oh-so-important swagger. The big-name investment banks had top candidates lining up at their recruiting tables and thousands of applicants for the few coveted spots for future broker dealers.

But that image held by future broker dealers has been clouded in recent years by horror stories of weekends spent at the office, frequent all-nighters and seemingly unsympathetic bosses.

Wall Street now finds itself with the public relations challenge of having to woo and retain young talent. As part of the effort, many new hires found out this week that they could be paid roughly 20 percent more than their counterparts were offered last year.

The reason: The top banks, after decades of easily attracting the best and brightest from Ivy League campuses, are now worried about losing their favored status, especially as companies likeGoogle and Facebook can offer similarly high pay combined with luxurious benefits. A rash of cuts, regulatory issues and other problems after the 2008 financial crisis has not helped. Continue reading →

BrokerDealers and Bankers Using James Bond Strategies

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Brokerdealer.com blog update courtesy of extract from today’s WSJ story profiling James Bond style schemes used by bankers and brokers in effort to wrap pending deals and transactions under a cone of silence.

wsj logo“Project Swift” sounds like the name of a military invasion or an Olympic marathoner’s training plan. But it is actually the code name for a corporate buyout, inspired by a private-equity associate’s fondness for singer Taylor Swift.

Labels like Project Token, the name Apollo Global Management APO +0.41% LLC used to mask its purchase of children’s restaurant favorite Chuck E. Cheese, or Project Fusion, the code for Kinder Morgan Inc. KMI +1.23% ‘s consolidation of its oil-and-gas holdings into a single company, are designed to keep reporters, traders and even rival companies from sniffing out deal news before formal announcements are made.

For the young bankers who get to choose them, code names are an amusing diversion from the financial modeling and PowerPoint presentations that fill their days.

But one deal-making powerhouse is putting an end to the name game, opting instead to automate the process to avoid the pitfalls that go with the territory.

Goldman Sachs Group Inc. GS +0.82% now requires bankers to use name-generating software that offers 10 random options like Project Calculator or Project Daniel. The new system has been phased in across the bank over the past two years, according to people familiar with it.

Though bankers can refresh the options as often as they like, some say the new naming process has taken some fun out of the game. And they say people involved in their deals often forget the random names generated by the software.

For the full story from the WSJ, please click here.

New York AG Puts Top BrokerDealer Dark Pools In Cross-Hairs (Again)

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BrokerDealer.com blog update courtesy of multiple news sources.

NY AG Eric Schneiderman

NY AG Eric Schneiderman

Less than two months after N.Y. Attorney General Eric Schneiderman levied charges against Barclays that it deliberately misled investors in its dark pool, regulators are reportedly looking into operations at five more investment banks. No specific allegations have been revealed, but several firms have confirmed that either Schneiderman’s office or another agency is investigating their practices.

The latest additions to the list of firms under scrutiny by the N.Y. attorney general’s office are Goldman Sachs and Morgan Stanley, according to The Fox Business Network, which cited people with direct knowledge of matter as sources. Neither firm has publicly acknowledged an investigation, but they also would not deny the scrutiny, according to the report.

Press officials at both firms as well as at the N.Y. attorney general’s office all declined comment.

One week ago, Credit Suisse revealed that regulators have asked the firm for information about its alternative trading system (ATS) as part of an investigation into dark pools. Credit Suisse said it was cooperating with “various governmental and regulatory authorities” regarding its ATS but would not specify which regulators were investigating, according to the Wall Street Journal. The bank further said that it is one of 30 defendants named in lawsuits related to high-frequency trading or other alleged violations filed with the U.S. District Court for the Southern District of New York.

Days earlier, UBS and Deutsche Bank disclosed that they were the subject of inquiries. UBS said that it was being investigated by the Securities and Exchange Commission, the N.Y. attorney general’s office and other regulators as part of an industry-wide investigation, according to the New York Times.

“These inquiries include an SEC investigation that began in early 2012 concerning features of UBS’s ATS, including certain order types and disclosure practices that were discontinued two years ago,” the firm said, according to the New York Times article.

At the same time, it was reported that Deutsche Bank separately disclosed it had been contacted by regulators. Deutsche Bank did not reveal which regulators had contacted the firm, but the New York Times report cited an unnamed source familiar with the matter as saying that the N.Y. attorney general’s office was investigating.  Deutsche Bank and UBS both said they were cooperating with authorities.