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Did he make 100 m in profits for the company or did he earn 100 m for himself from GS as renumeration?
He'll likely get something in the ballpark of 5-10% as bonus. That's the typical rate at a desk where he's primarily making money from flow.
Short version: banker provides liquidity to the markets and buys up junk bonds from panicked sellers at 40 cents on the dollar. Banker then sells the bonds for more money as the panic dissipates. Some people wonder if important banks like GS should still be making volatile bets like this.
GS has about 90 bln in total equity and nearly a trillion dollars in total assets. 100m sounds high but 100m is a rounding error especially if spread across 100s or even 1000s of trades.
Earlier quoted context omitted.
The mood among bank staff... everything is shut down by compliance, and if they could, they'd work in a different industry. People I know at banks, anyway.
The mood among bank staff... everything is shut down by compliance In what sense is "everything shut down by compliance?" Is compliance so cumbersome, that no one can be arsed to do any big trades?
Imagine your compliance officer coming over to you or a coworker to give you news of an investigation of trading activity that happened months ago.
Imagine banks hiring compliance employees to keep up with a growing number of regulations, and firing IT guys to pay for it.
Imagine being quoted on the biggest trade of the year by a client who is screaming at your salesman for a price, and having to mentally iterate through a checklist of "is this over X dollars notional, does it surpass Y position limit, etc" because you have been in ten different meetings where compliance officers passed out Powerpoint presentations outlining new rules.
Imagine seeing an opportunity for a great trade, but doing nothing about it because you can't justify opening a new position in a subsector where you have no client positions.
Imagine having your emails and messages frequently investigated by regulatory bodies because they were flagged by a word search or some other unsophisticated screening tool, and being asked to write an explanation of months-old conversations that you have since forgotten. After a while, you don't feel comfortable putting anything in writing at all, even if you follow every rule in the book.
Earlier quoted context omitted.
He'll likely get something in the ballpark of 5-10% as bonus. That's the typical rate at a desk where he's primarily making money from flow.
So he make 5-10M Bonus? Is this a lot in Investment Banks? ( Absolutely no idea about their payscale. )
@dang - the profits were for the firm, so the title is clickbaitish. Suggested alternative: "How One Goldman Sachs Trader Made His Firm More Than $100m"
Earlier quoted context omitted.
The mood among bank staff... everything is shut down by compliance In what sense is "everything shut down by compliance?" Is compliance so cumbersome, that no one can be arsed to do any big trades?
Imagine tons of meetings about new/impending regulations that are unclear, poorly defined, restrictive, and enforced by regulatory employees who don't always understand the nuances of the businesses they are overseeing. Imagine your compliance officer coming over to you or a coworker to give you news of an investigation of trading activity that happened months ago. Imagine banks hiring compliance employees to keep up…
Imagine you make 10 times the national average salary
Like the article says, it's very hard to distinguish between market making and prop trading. Especially in illiquid stuff like corporate bonds, the MM needs to hold positions for extended durations, so they have a valid excuse to not be closed down entirely by Volcker. The real reason they make all that money is flow. The guy on a desk like that knows what customers are calling, what they're concerned about, roughly…
There is a difference but it is subtle.
Earlier quoted context omitted.
Imagine tons of meetings about new/impending regulations that are unclear, poorly defined, restrictive, and enforced by regulatory employees who don't always understand the nuances of the businesses they are overseeing. Imagine your compliance officer coming over to you or a coworker to give you news of an investigation of trading activity that happened months ago. Imagine banks hiring compliance employees to keep up…
>> if they could, they'd work in a different industry Imagine you make 10 times the national average salary
Plus the politics in a shrinking industry, you need a big premium to suffer through it.
A lot of people who work in banks do not have a particular love of the industry, they're there because it's what paid well when they finished university.
@dang - the profits were for the firm, so the title is clickbaitish. Suggested alternative: "How One Goldman Sachs Trader Made His Firm More Than $100m"
A "Managing Director" so I'm pretty certain that he didn't do it himself, his team(s) did. Frankly annoyed by this recurrent praise for management people, at this level such a guy never dips a toe in the trenches.
Like the article says, it's very hard to distinguish between market making and prop trading. Especially in illiquid stuff like corporate bonds, the MM needs to hold positions for extended durations, so they have a valid excuse to not be closed down entirely by Volcker. The real reason they make all that money is flow. The guy on a desk like that knows what customers are calling, what they're concerned about, roughly…
Yeah but the money he made from this doesn't sound like flow, sounds like a large directional bet (similar to the london whale event, except this one happened to work)