Pay Structure - FICC S&T
Given that sales and trading is such a performance-driven career path, I was hoping someone could provide some color on how compensation typically works across different bulge bracket firms.
For example, do salespeople earn commissions on individual trades, or is their compensation more closely tied to overall volume or client flow over a set period? Is client performance ever a factor? If a desk sells $1 billion in CMBS to an investment fund, would they be compensated directly based on that transaction?
On the trading side, is comp generally tied to the P&L of their book, or is that type of structure more common in prop trading environments? Are traders ever poached from competing firms?
Additionally, how is compensation typically split between base salary and bonus? Does this breakdown shift meaningfully depending on the asset class (e.g., rates vs. equities vs. credit)?
Any insight would be greatly appreciated! Genuinely curious as to how all this works, as I am an incoming intern thinking about long-term career details/prospects (and don't want to ask this on the desk)
Just an analyst so take this with a grain of salt.
In most cases nowadays, compensation in sales is not directly tied to commissions and in trading is not directly tied to desk P&L. Broadly, there are three things that affect compensation: firm performance, desk performance, and individual performance. From these three factors, management dictates a bonus for you.
In the old days, individual performance was the largest factor, but comp has become more collectivized over time. This trend is more significant at some banks than others (i.e. some banks follow more socialistic pay structures).
S&T folks are poached by other banks all the time. This has become more disruptive in an era when some banks have only 1-2 traders of a particular product (and thus replacing those losses becomes very expensive).
The core of the S&T comp regime is that you’re paid an estimate of how much they need to pay you to prevent you from leaving the firm. Top bucket is for people with lots of other options; bottom bucket is for those the bank wouldn’t mind losing.
Appreciate the insight, that really helps clarify how things work. Do you think this kind of compensation structure applies similarly on the buy side, or is it more individualized there?
I am also curious how people tend to move up. Do traders usually switch firms for better opportunities, or do they grow internally by taking on larger accounts or books? I am trying to get a better sense of how competitive things actually get, especially since I would prefer a performance-driven environment over one with a more socialized compensation model.
If individual performance is becoming less of a driver, what usually separates senior people from junior ones when they are doing similar tasks? Is it mostly about tenure and relationships, or are there other factors that start to matter more over time?
Lastly, do you notice any differences in compensation culture across desks or product types? Just wondering if some areas tend to be more merit-driven or competitive than others.
Not clear on buyside compensation because the buyside is so broad; you’ll see both models depending on the firm.
As long as they’re producing, people tend to move up in S&T before plateauing at a certain point (for most this is Director but can be earlier). The step to MD or Desk Head can require moving around firms since openings are scarce. This contributes to S&T being a “middle-heavy” business (few analysts, lots of associates to directors, few MDs).
Senior people fundamentally do the same things junior people do; salespeople sell, and traders trade. In sales you take on bigger clients as you progress. Senior traders can take on more risk and may trade more complex products. This continues until you progress to senior management (and trade front-office responsibilities for admin) or get fired.
Compensation across desks will vary depending on the bank; different banks excel at different products. Generally the more merit-driven desks will be those where you can point to a chunk of profits at the end of the year and say “I did that.” Roles where you play more of a supporting role (ex. Structuring, xVA, Funding/Liquidity) will depend more on the overall business performance for their comp.
Great answer
This answer was super helpful for me, I was also wondering if you could you give a sort of estimated salary for Analyst, Associate, etc.. in S&T as a salesperson at a BB? Much appreciated.
which banks are more socialistic in terms of the pay? and whom are more individualistic?
Can give color for traders although pretty similar for sales
At the junior level (analyst years) sales and traders at most banks make basically the same
Everyone just basically a helper so bonuses for all are basically the same
+- a few k with the exception of superstars (incredibly rare)
Where it gets interesting is once you get a book, the level you get that at can also vary.
Rule of thumb on the sell side for traders is you get paid essentially 5% of your pnl. Where you can get screwed is if you have a great year as an associate as they won’t pay you the big bucks then but they compensate that by early promotion usually. Let’s say you make 20mio pnl you’re not getting 1mio TC as an associate, but you’ll get 500k + VP plus you’ll be pissed so half the street will know so you’ll get poached with high guarantee, and can counter with your bank and then guarantee your year.
The 5% rule is a rule of thumb except at a bank like Nomura where these guys still have official formula payouts (not sure exact #% tho).
Sales obviously don’t have pnl but somehow they get paid somewhat similar depending on their sales credit and how much markup (which back then would have been hard commission) they made for the bank.
Who makes more you might ask? That depends on the bank. Some banks are traders banks some banks are sales bank. By that I mean who’s valued more by management.
Happy to go in more details if you have more questions.
Great answer, and this is what I was looking for. I guess three quick questions to build off of:
To answer your first question:
You’re describing something like on the show industry. I don’t think that’s really a thing at least not that I’ve heard of. It’s not unheard of, of a head of sales moving and then rebuilding his team and bringing in traders he’s worked before with, but not like you’ve described. However, entire trading teams getting poached, I have seen it yes, mostly a senior and his junior or something of the sort.
Pnl really vary, even within the same realm. For example EM FX: you’ll see some with budget of 5mio some with 25mio. What makes the difference is seniority, past performance of the trader and the book, and the size of the market (for example China FX trader vs Peru FX). Fixed income same thing so really depends.
Office politics are incredibly important at a bank. Can save your ass when you have a bad year and or can cost/earn you a few extra k during bonus time.
Appreciate the depth. What do you think makes a "superstar" analyst when you are practically an assistant? Also, what would you say are examples of traders banks vs sales banks?
Nice username. Yes the superstars comp are the ones you read about on WSO or efinancialcareers
Superstars are the ones that naturally get it. It’s not about being good or bad,the superstars are the ones that get on the desk day one are explained what the desk does and actually gets on the spot. That’s rare. They get it, they understand the math, the dynamics, the pricing, the macro, the clients interactions, and more importantly the ones their boss can trust from day 1.
Eventually the ones that make it to trading (meaning they last in the industry as traders) have all these qualities, but very very few actually have them from day 1. Those that do usually either go up the ladder very fast or don’t last long at the bank as the hedge fund clients hear about them and poach them immediately.
The difference between a sales and traders bank is as easy as who is valued more by the bank. Can be due to either higher ups (head of markets, CEO or whatever) being from sales or from trading therefore valuing that more. Or it can be because they are way more risk averse in which case traders have way less rope to take risk, and so sales become more important to bring flow for traders to make money. That is what makes the difference. In the end is who gets more money during bonus season
"The 5% rule is a rule of thumb except at a bank like Nomura where these guys still have official formula payouts (not sure exact #% tho)." Could you elaborate on the "official formula payouts" ? I have never heard of this and am very curious.
Bump
Hi, I was quite curious in terms of the guaranteed bonus - this will be payed out at the end of the year right? What if that guy doesn't make a good contribution? Will they still do the payment?
And what if they've earned much more?
Yes they pay it either way.
If you really outperform you might get more but that’s rare
Late on the bandwagon, but thank you for this. How does the trajectory / pnl split differ for shared books? For instance most banks run FX options as global books that get passed around centers - is individual attribution then 5%? CVA is another one where pnl attribution is not clear to me.
This is the best breakdown of how S&T actually works I have seen on this site. While the day to day does not feel like other corporate careers at the end of the day its exactly like all other corporate careers, if the guy who signs the checks likes you, you get paid, if not you hope you can find a bid away.
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