Currency traders to see the least pay cut on Wall Street

The volatility in foreign-exchange markets, the most since 1992, means currency traders will see the smallest pay cuts as the worst financial crisis since the Great Depression wipes out bonuses on Wall Street.

While bonuses, which account for the bulk of annual pay for traders and investment bankers, will fall an average 45 per cent this year, currency traders will see declines of about 15 per cent from 2007, the least of any department, according to Options Group, a New York-based consulting firm.

Top executives at New York-based Goldman Sachs, Morgan Stanley and Merrill Lynch, gave up their bonuses as banks reported $1 trillion in writedowns and losses since the start of last year.

The biggest drop in the Standard & Poor’s 500 Index since 1931, a $100-a-barrel collapse in oil prices and the largest losses in corporate debt led to 200,000 job cuts at banks around the world. Yet data from the Comptroller of the Currency show foreign-exchange trading revenue at US commercial banks rose 66 per cent in the second quarter from a year earlier. Trading accelerated after the collapse of Lehman Brothers Holdings in September.

“Our team had been working long hours all year, but the days grew exponentially,” after the September 15 bankruptcy filing of New York-based Lehman, said Russell LaScala, head of North America foreign exchange at Deutsche Bank AG in New York.

Foreign-exchange desks of Frankfurt-based Deutsche Bank and UBS AG of Zurich, the world’s two largest currency traders, posted three consecutive quarters of record revenue from foreign exchange, according to quarterly earnings reports. The firms didn’t break out the revenue figures.

A trader who has been a vice president for three years will get on average a bonus of $350,000 to $450,000, according to Options Group, which started tracking pay and hiring more than a decade ago.