Interview with Anton Kreil of BBC Million Dollar Traders

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Anton Kreil

13 Oct, 2010

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PM: So you're saying five percent out of the one hundred would actually be these people who haven't got the qualifications initially ?

AK: Yeah and after three years, quite a few of those guys will still be around because they're hungrier.  That’s because they don't actually feel like they deserve to be sitting at an investment bank.  A lot of the other ninety five percent, that have the qualifications on paper, are just doing it because their parents have forced them into a profession that has a brand name attached to it.  "My son works at XYZ."  They're not doing it because they love the business.  They're not doing it because they love to trade.  They're getting up at 5:00 in the morning, 5:30 in the morning because they have to. If you feel like you have to be in the business for any reason you usually don't last much longer.

PM: I see what you mean.  That covers that quite nicely.  When you were working in the city, how were you remunerated ?  Did you get paid a bonus ?

AK: Absolutely, but it's all changed recently. At the investment banks it used to be all about the PnL from your proprietary trading book or your back book.  You would get paid a fixed percentage on that.  I say fixed, it was a “discretionary” bonus but everyone kind of knew you'd get paid between five to ten percent of what you made for the bank.  You'd go in and start off as a young trader, prove you could make money, and you'd get given more every year until you built up to a point where you were making very good money for the bank and very good money for yourself.

Since 2008 it's really changed.  To get around the government and media focus on bonuses, investment banks have pretty much trebled a trader's basic salary from around one hundred thousand pounds a year to three hundred thousand a year. Bonus rates have been slashed massively and traders now get paid a significantly higher proportion of their bonus in shares. The golden handcuffs have got bigger. This is because risk taking has been slashed dramatically as well.  To keep their good people, they've had to pay them in some way. That's for the investment banks but for hedge funds, the payoff is a lot more pure. You basically just eat what you kill and that's the bottom line.  

PM: Is this the same internationally or is it the just the case is the U.K.?

AK: It's pretty much the case across New York, London and Southeast Asia.  It's been a different situation in Japan for a long time.  On a side note, this is the main reason why London property is outperforming the rest of Europe.  High Street banks used to calculate a trader’s mortgage based on their basic salary plus 50% of last year's bonus.  Now they just calculate it on four time’s basic salary. Traders from investment banks can actually get bigger mortgages and bigger houses than they did three years ago. So all the people that were winging about bankers bonuses between 2008 and 2010 have ended up putting traders in a better position and gifted them bigger mortgages and bigger houses. There are of course a lot of traders that don't have mortgages. Over every business cycle the rich get richer and the poor get poorer. 

PM: That's very interesting.

AK: That's just a small take on what's happening now.

PM: Very interesting.  What were the hours like when you were working in the city ?

AK: There are hours when you were actually in the office and there are hours that your mind is actually focused on the job. Hours that I was in the office were generally six in the morning until six in the evening but I'd be up at five a.m., taxi to work because no tubes were running and work all day until six with lunch at the desk. Markets are obviously open eight a.m. until four thirty but you've got the overnight markets and you're running proprietary trading books and risk positions on the other side of client trades. You have to be watching the overnight markets all the time and be aware of them, be aware of all the news that's breaking twenty four hours a day. I would generally be working on the mobile at home until 9:30 or if I was in a restaurant I'd be taking calls until 10:00 in the evening and be up at 5:00 again. 

PM: It's quite a long day, seventeen hours basically.... ?

AK: Not forgetting weekends too. You never really switch off.  You have to be very mindful as well that you have to get up again at five on Monday morning.  You're generally not really out partying until all hours on Saturday night because you're in effect just jet lagging yourself for Monday.  Monday is really important.  You have to start the week well making money.  After that the rest of the week should take care of itself. 

PM: Did you have people working under you at the time ?

AK: Yes, we always had the graduates and trainees working on the desk so I used to run proprietary trading books in specific sectors and we'd have graduates and trainees doing research, basically digging for all the information and doing all the work that we had no time to do. We also had research analysts. In effect, your research analysts are working for you because they're bringing you all the news, and all of their views to you all the time, the valuations of companies and their response to fundamental news etc - good research analysts generally know that their number one client is their in house trader.

The sales traders are a trader’s distribution, so when you have a take on what's happening in the market, you'd write it up very quickly or go out "over the top" (on the microphone) to the whole trading floor and push your view to do business. The Sales Traders go out and sell that view, and bring in the orders. That’s your distribution basically. Pension Funds and Hedge Funds then trade on the back of what you're saying or in a lot of cases against what you’re saying. The important thing is you’re saying something. Traders that don't have a view aren’t traders.

The industry was and still is generally supported by the intelligence or intellectual property of traders. Generally, everything in the markets, everything on the trading floor, when something breaks, when something happens, or you want to know something about a stock, your first port of call is the trader.  They will be able to tell you everything that's going on.

PM: Who did you report to when you were in that role ?

AK: I just reported direct to the head of Europe.

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