Pricing a trader

Strange · Post by **Strange** » Sun Jan 14, 2007 8:33 pm

I am doing a favor for a buddy of mine who is looking for a job. He's got a few tentative deals, but is unclear where to price himself. His current location is London, but he is also looking at New York and Asia, so let's see some color globally:

Experience in reverse chronological order:

1 year trading exotic equity derivs at a "bulge name". Solid desk, nice P&L but not running his own book (which is normal for junior traders on big desks like this one).

1 years trading FX exotics at a shitty name (that's where I know him from). I think he had his own book but was not doing much. May-be some fixed income exposure there too.

2-3 years as a desk quant in a bulge name. Flow credit, if my memory serves me right.

Educaton: Physics PhD, second-rate name.

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My market would be (all USD)

New York: 250/300

London: 300/350

Japan, HK: 300/350

Where do you see the market given the structure?

JabairuStork · Post by **JabairuStork** » Sun Jan 14, 2007 10:27 pm

In NYC, I think /300 is a reasonable offer that will get lifted. Bid side not really relevant to this discussion as far as I can tell.

Strange · Post by **Strange** » Mon Jan 15, 2007 1:44 am

Very interesting, he is making much less, as far as I know, in the lower 200s. So far, one of the headhunters said something to the extent of "they would be reluctant to go across the figure", meaning there is a resistance level at 300.

The reason that I care is that I keep hearing that fresh B-School grads are getting 300k+ to start on various trading desks.

rowdyroddypiper · Post by **rowdyroddypiper** » Mon Jan 15, 2007 2:18 am

You aren't hearing this from fresh B-School grads are you? I think if you're starting on a desk you're starting on a desk, they may just have positions slotted. Remember the B-School grads will have had some experience prior to going to B-School in most cases.

Strange · Post by **Strange** » Mon Jan 15, 2007 3:59 am

No, I've yet to actually see a B-School grad with that kind of starting salary. But there was a few stories on the web about it. But the more I think, the more these stories sound like some of the stuff you see in the OTC brokers market - if you try to hit the bid or lift the offer, they "done it away" or "there in 1 million" :)

BTW, I would have a strange vibe about any guy who used to trade, went to B-school and is now trying to get back into the same stream - why would he need an MBA?

Talking of trading - do you agree with the market me and JS made? The other question is - would you try to bid him lower?

rowdyroddypiper · Post by **rowdyroddypiper** » Mon Jan 15, 2007 4:39 am

Sorry, what I meant on experience was work experience in general, not extensive trading experience specifically. Generally doing the analyst training program and being taken on for a few more years. Very strong in powerpoint.

300K is fair for someone with limited track record but good potential. Where I would bid him is of course contingent on many factors but based on the facts here, I don't think that 300K is unreasonable in either direction. Of course I'm not in the market for any IR traders so take my bid for what it's worth. In my experience he'd generally get a range of compensation (ie. your base is X and your bonus will be targeted between Y-Z dependent on company results, individual performance, etc.). If he's working out he'll hit the high side of what he's expecting, if he's not, he won't and wasn't going to get it anyway.

This is all based on my experience so I'm sure once a few of the HHs in the forum get a look at it they'll be able to give you better color.

tabris · Post by **tabris** » Mon Jan 15, 2007 4:56 am

Strange, were you refering to this article?

Strange · Post by **Strange** » Mon Jan 15, 2007 5:15 am

Yep, that's exactly it -- 300 on wall street, 450 in private equity. Given that MBA grad knows nothing, has no experience, can't produce right away and is likeley to leave after a few years, why would any firms pay them so much? Makes no sense to me at all.

NS · Post by NS » Mon Jan 15, 2007 6:00 pm

I don't do enough work on trading to provide an accurate market on this, however I can give a suggestion on London vs Tokyo vs HK based on quants / structurers.

i would price HK slightly below London and Tokyo slightly above London.

HK is less gross but net it is more than made up due to low tax - ex-pats sometimes get a generous housing allowance on top of this.

Tokyo seems to be more gross, but is less net due to higher tax - however outside this equation again there can be even more generous housing allowances. I would guess that the emergence of HK / Sg has reduced supply of good guys to Tokyo, thus driving prices up.

sasquatch · Post by **sasquatch** » Mon Jan 15, 2007 6:10 pm

I've been doing this for 10 years and my gut tells me that this half of this story is "pure" sh*t to pump people with spin and the other half may be reasonable. There are two tracks for getting an MBA - some allow you to go right from your undergrad (and, if that's the case, there is no way you're worth 300K+ - you're completely unproven and I could care less how much "potential" you may have. It's just unrealistic.) and then the usual route of after about 3-5 years of experience, where the numbers then become justified. Buat, as Strange pointed out, why would you go get an MBA if you're already tracking at these numbers?