Is Fixed Income Trading on decline?

Hey, the other day my finance professor told me that fixed income trading activity is decreasing at many Wall St. banks and firms and it's just a retail market that's left now. Is this true? Because in the recent banks earnings season, all BBs at least reported 3x earnings in FICC compared to Equities division.

Comments (22)

Aug 28, 2020 - 7:34am
Bumblebtuna_analyst, what's your opinion? Comment below:

Yah prof is wrong. S&T seats have declined due to electronic trading, but fixed income seats usually stay constant. The world is only borrowing more from the debt capital markets, so we'll always have a place. Also I'd like to point out that FICC revenues have hit record levels the past two years.

  • Analyst 1 in IB - Gen
Aug 28, 2020 - 4:13pm

How do you feel about the potential proliferation of electronic platforms like MarketAxess? Sure they trade smaller odd lot size now, but can't that creep up in size over time?

Do you think entering fixed income trading as a 22 year old, today in 2020, is a good idea? Not from a job for a few years standpoint, but rather, from a long term career standpoint.

Most Helpful
Aug 28, 2020 - 7:25pm
Bumblebtuna_analyst, what's your opinion? Comment below:

MarketAxess already does block trading direct to customers. No one trades with a bank for execution, they do it for research and liquidity. You know as an account that if you need to sell a 500mm portfolio, that your top coverage bank will dedicate as much time as it takes to get you liquid, and they'll hold your hand the whole damn way. As far as career prospects, as long as you place on the right desk at the right bank you should be fine. Don't expect to be sitting pretty at SMBC trading dollar bonds, you have to go for illiquid products like Muni's, Agencies, HY products, etc. Also keep in mind you could place on an underwriting desk, which prices new issues, and they will be in demand until the end of time. I think if you're smart and you work hard you can do well in FICC right now and you'll have job security.

Sep 1, 2020 - 7:31am
siiskm, what's your opinion? Comment below:

In term of headcounts and compensation, fixed income trading or investing have been shrinking for 10 years!

funny thing? There was a MD 8 years ago told all analysts that bank will always find a way. Guess what? He get laid off 5 years ago and couldn't find another job! Because more trading desks are closing instead of hiring. Only top 5 players in the field survive everyone else die! He now operate a restaurant. I guess that's how he find a way, by switch from trading to cooking

Sep 1, 2020 - 7:33am
siiskm, what's your opinion? Comment below:

Size of market won't shrink, maybe even grow with so many debt issued this years.

Compensation is shrinking long term wise. Less funds and banks hiring so bank nowadays think your bonus is to have a job. Don't expect too much money wise

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
  • Anonymous Monkey's picture
  • Anonymous Monkey
  • Rank: Chimp
Sep 1, 2020 - 8:22am
Anonymous Monkey, what's your opinion? Comment below:

What are your views on the IB industry then?

Sep 1, 2020 - 10:03am
powerforward1, what's your opinion? Comment below:

juniorization. half the class will quit in 2 years. only 15% will make it to VP

  • 1
Sep 1, 2020 - 6:34pm
Loots, what's your opinion? Comment below:

Fire from the top, hire on the bottom

But also intern return rates are lower this year in general

Sep 1, 2020 - 11:05am
bankerboy252, what's your opinion? Comment below:

This is completely inaccurate.

Choose the right desk and you'll be fine. Different banks are known for different seats and products. If you go into a regularly way gogo FX or Rates sales seat, your job exists only at a bank and you service clients for super liquid electronic transactions. Now if you enter an OTC market that's more idiosyncratic, as a risk taker, it's different. Individual styles and personalities fit better in diff spots. FICC is strong and will remain that way.

EBITDA rules everything around me

  • 1
  • 1
  • Trader in S&T - FI
Sep 2, 2020 - 2:08am

I hear that the general consensus is to go somewhere illiquidity as its the last to get hit from automation.

I'm starting up at a BB Investment Grade trading desk next year would be interested in hearing some advice.

  • Intern in S&T - Other
Sep 2, 2020 - 11:26pm

Don't have any advice other than hearing that IB credit is the next frontier for automation and probably a good place to move out of unless you're qualified (i.e. have the coding skills) to assist in that automation. 

Nov 26, 2020 - 8:05pm
ell29, what's your opinion? Comment below:

agree, all odd lot bond trading desks have recently been fully automated. IG credit is next on the chopping block 

Apr 6, 2022 - 1:24pm
Laser44, what's your opinion? Comment below:

Et in est illum reiciendis repellendus aspernatur. Porro voluptatum sunt officia iusto qui laboriosam officiis. Dolor ut optio suscipit et. Commodi quia suscipit nostrum ut.

Sint et distinctio sit sit et nobis. Inventore nisi corrupti nisi totam officia soluta eos consequuntur. Dolor ex repellat nihil nihil.

Start Discussion

Career Advancement Opportunities

September 2022 Investment Banking

  • Jefferies & Company (▲05) 99.6%
  • Lincoln International (= =) 99.2%
  • Bank of America Merrill Lynch (▲04) 98.8%
  • Financial Technology Partners (+ +) 98.5%
  • Evercore (▽02) 98.1%

Overall Employee Satisfaction

September 2022 Investment Banking

  • Jefferies & Company (▲12) 99.6%
  • Greenhill (▲07) 99.2%
  • Evercore (▲01) 98.8%
  • PJT Partners (▽02) 98.4%
  • Macquarie Group Limited ABN (▲21) 98.1%

Professional Growth Opportunities

September 2022 Investment Banking

  • Jefferies & Company (▲05) 99.6%
  • Lincoln International (▲03) 99.2%
  • PwC Corporate Finance (▲12) 98.8%
  • Bank of America Merrill Lynch (▲05) 98.5%
  • Houlihan Lokey (▲05) 98.1%

Total Avg Compensation

September 2022 Investment Banking

  • Director/MD (10) $613
  • Intern/Summer Analyst (318) $407
  • Vice President (38) $392
  • Associates (209) $257
  • 2nd Year Analyst (130) $163
  • 3rd+ Year Analyst (19) $160
  • 1st Year Analyst (438) $151
  • Intern/Summer Associate (83) $150