Not all trading profits are created equal, at least not when it comes to their bonus-earning potential. For example, it’s better to make your profits toward the end of the year and have them fresh in the compensation committee’s mind than to have a stellar first quarter but to go into the year-end with people thinking “what have you done lately”.
We might see this sort of dynamic play out for emerging market credit trading desks, now that banks like Goldman Sachs and JPMorgan are shutting down market-making operations in Russian debt. Earlier in the year, and perhaps surprisingly, Russian debt had apparently been an extremely profitable space for the few traders who could bring together the flow, capital and know-how to help clients wind their positions down. Traders like 29-year-old wunderkind Akash Garg were reportedly responsible for as much as $100m in PnL on their own.
It’s not clear how that might have continued into the second quarter, but in a year when there were few other bright spots, the people trading Russian debt might have had decent reason to believe that they would be among the ones to get looked after. But as the year and the war have dragged on, the positions have presumably been exited, the sanctions have been tightened and populist politicians have started demanding names of all the clients. Consequently, it appears that the banks have decided that the market is now more trouble than it’s worth.
Which leaves the heroes…
