Top 10 Buy-side trader’s excuses for why your equity commissions are down 50% this year
1. With all of the blossoming opportunities in the international debt and credit markets we have dismantled our equity arm in favor of CDS and bonds. I appreciate the fact that you are “seeing flow” in debt now and have added me to your runs, but, for what it’s worth, tacking on an extra half point to the real bond dealers’ spreads aren’t very helpful. Also, you would sound more credible if you actually realized that in bond-land, price and yield move in opposite directions. Don’t sweat it too much – by the time you have a faint grasp we will be onto something new.
2. Believe it or not, even though your commissions are down 60%, you have actually moved up 5 spots in our overall rankings, so you should be pretty proud of that. The one eyed man wins in the world of the blind. I will let your manager know, cyclops.
3. That algo guy you brought in to “enhance” your business. Yeah, well, we decided we liked trading at 40mills so much that we are channeling everything through him now. Nice work you cannibal.
4. Not sure what your problem is – you are only running a 75% loss ratio, most guys I trade with run around 110-120 and hope to make up the difference with volume (see #9).
5. You are right – we need to really load you up to pay for that 1000 share allocation on that Opentable IPO or the 5 minutes your analyst spent telling our analyst absolutely nothing.
6. Our credit committee decided you were too high of a trading risk, even on 3-day DTC settle, so we’re trading only with Goldman now. Have you seen your CDS lately? You might want to support the charge to ban that market cause you guys are about 2 bad trades and 20bps of credit spread away from being the next Lehman.
7. TARP, the gift that keeps on giving. Not only has your firm’s government assitance ruined your chances of a bonus before the millenium turns, but it has also made you too high risk for our counterparty risk profile. Feel free to let your manager know so he can pay no attention and ride you like a Belmont gluestick.
8. My soft dollar guy goes 1×1 now and my other flow only broker, when factoring dinners and events, is actually losing money so….
9. That big crisis we all read about, yeah, it sorta impacted us too. Pretty simple math, when AUM drops 70% the size of our orders tends to do the same.
10. I’m sorry, who are you again? That name sounds vaguely familiar but HE worked for a real firm with a real product and… CLICK!
–Red Bull (A disgruntled buy-sider)
