Bye bye bonios
Market participants have been saying for some time that 2008 will to be a bad year to have a good year. However, until the past couple of weeks, the general view has been that bonuses, aka ‘bonios’, will hold up. ‘If the banks want to keep hold of the producers, they will have to pay them,’ seems to be the consensus.
I have long had my doubts. After all, banks around the world have come under increasing political pressure to cut back on their bonus payments, which is very tough for those in FX who have continued to work hard and produce the goods. To find out now that they will not be getting what they think they deserve is inevitably harsh. The reality is that few traders will be able to flounce out of their current workplaces and into new jobs. The simple question is: Where would they go?
There may be some institutions, such as Nomura, still waving their cheque books around. But deflation is going to impact on salaries and remuneration packages in FX as much as it is elsewhere. While much commentary has suggested that we are heading for a recession similar to the early 1990s, the FX industry will almost certainly revert further.