The bonus of U.S. bond traders, once dubbed “the masters of the universe”, should fall by about 15% in respect of 2013, according to Johnson Associates. Conversely, those asset managers should jump by … 15%.

As the end of the year approaches, speculation is rife bonuses on Wall Street. Whether U.S. financial reassure themselves, their variable remuneration for the 2013 financial year is expected to show an increase of 5% to 10% on average compared to 2012, according to Johnson Associates , who interviewed the eight largest banks and six largest asset management companies in the country.

For example, the increase – the second in a row since the financial crisis of 2008 – bringing the total emoluments (fixed salary plus bonus) a managing partner in an investment bank in annual $ 850,000 on average. Vice-President, one or two levels below, collect $ 400,000. The same functions performed on a desk “trading” (brokerage) will yield 750,000 and $ 350,000 respectively. Amounts certainly far from “packages” of two to three million dollars that were common before 2008, but remain comfortable.


A lesser risk appetite and short-term

Nonetheless, this increase of 5% to 10% bonus this year covers disparities. Thus, financial investment advisers, asset managers and investment bankers specializing in IPOs pilot should see their bonuses rise by at least 15% in respect of the year. Those bond traders should be aware of a change of the same magnitude, but … down, according to Johnson Associates. A blow to the “masters of the universe”, as was the custom nickname on Wall Street.

Of course, the bond market had in 2013 an “annus horribleness” , due to uncertainties related to the continuation of massive purchases of government bonds by the Fed. But beyond this cyclical element, the differences between bond bonus traders and asset managers reflect the beginning of a culture change on Wall Street, namely a reduced appetite for risk and the short term.

The proliferation of regulations passed by there

It is not that the banks have become themselves more virtuous, but the financial crisis, with the resultant number of national and international regulations, passed by there. Thus, the Volcker Rule, which should be finalized by the end of the year, prohibits U.S. banks to speculate on their own account. And future international regulation of Basel III requires banks to put more capital in front of their commitments considered particularly risky.

This means if the Sherman McCoy, the name of the hero of the novel by Tom Wolfe, “The Bonfire of the Vanities” and other specialized trading traders of “junk bonds” are no longer in the odor of sanctity Wall Street. Their activities to highly volatile revenues, but highly lucrative in the 1980s, have become too greedy capital in the light of new regulations.

Wall Street is less glamorous but safer

Banks now prefer their trades asset, which require less capital management, and generate regular thanks to management fees and other commissions income. ” Banks who grow other people’s money, not theirs, that’s what regulators want “, insists Johnson Associates. Morgan Stanley is one of the best examples of this mutation. James Gorman, who presides over the U.S. bank since 2010, has refocused on wealth management. A successful strategy based on solid results published by Morgan Stanley, for the third quarter. Wall Street is less glamorous but more secure.