What percentage of their P&L do top proprietary traders get? I define a top trader as someone who has generated $20M or more of P&L for 3+ years with a Sharpe ratio > 2. How about more junior traders?

The number I most often hear is 50%. But I'm thinking of opening a commission house in Nevada where you get a blowjob when you make a good trade. You put up all your own money though, and I'm not sure whether to take a cut of profits or, since they will lose, to just jack up the commissions...

That's not what I'm thinking of. I'm thinking of proprietary trading desks at Wall Street investment banks.QuoteOriginally posted by: farmerThe number I most often hear is 50%. But I'm thinking of opening a commission house in Nevada

A "prop trader" at a firm is in essence an internal hedge fund - I would expect the guy would be getting ~20%. However, when your bonus is at the mercy of some guy or bunch of guys - that is, a "discretionary bonus," you will be amazed at how creative the bullshit gets when it comes time to get paid.

I'd be interested in hearing some replies to this thread.

In my industry, I would say around 9/10 %

just for bonus

I would say 10-15% is what would one typically get. If you think about it, a typical hedge fund charges ~20-30% of the return so it should not exceed this bound.

some highlights from an article i read recently....."Who Made What Of course, the big overall numbers merely prove a gaudy tease for the real question: How much did individual traders make? For top producers, that looks to be in the range of $20 million to $30 million, with a healthy number of energy traders leading the pack. Energy-trading stalwarts in 2005 were Goldman Sachs and Morgan Stanley, with J.P. Morgan, Citigroup and Lehman Brothers showing impressive momentum. Prop traders fared especially well. For instance, at J.P. Morgan, "there are two prop traders expecting to receive bonuses of around $20 million," says one source. Prop traders typically receive 10 to 20 percent of their profit, but on a risk-adjusted basis. Make a $43 million profit on a $14 million book and your boss will love you, but not to the tune of $20 million -- instead, think more like $1 million. Deliver more than $2 billion in profits for your firm? Well, now we're breathing McGoldrick-level air. "Most traders are earning between $2 million and $3 million, and some even just $250,000 to $750,000," says an executive recruiter who specializes in commodities. Aside from energy and some types of credit derivatives, such as CDOs, equity proprietary trading proved the leading area for the fattest payouts. One statistical arb trader Trader Monthly interviewed reveals that he made $10 million. Fixed-income wasn't far behind, with big traders at Goldman, UBS, Lehman and J.P. Morgan scoring especially well. Heads of fixed-income prop trading at these banks likely earned as much as $15 million for the year, sources say. Emerging-markets traders, meanwhile, experienced one of their finest years ever, with the best of the best taking home $5 million and up. It might appear that the year's overall bonus picture is big and Bentley, but there are plenty of Saab stories as well, with numerous Wall Streeters decidedly disappointed with their number despite -- or perhaps because of -- the unprecedented bonus-season hype. A dim second quarter at J.P. Morgan was blamed on trading losses in credit, rates and equities. The firm's head, Jamie Dimon, described the results as terrible, though client business remained strong. Proprietary trading at Citigroup sorely lagged, save for its decent emerging-markets and energy desks. Meanwhile, the slow death of equity flow/execution trading continues. One executive recruiter estimates an experienced equity-sales trader at a major investment bank is still looking at $1 million, but that's about half the total he might have received five years ago. Convertible bond traders also had it tough. "Even if you're the most brilliant convertible arb trader in the world, you didn't make money last year," insists one veteran hedge-fund executive. "....... some more info....."Over at fat-comp kingpin Goldman Sachs, which across the board rated as the highest-paying firm in the business, golden-egg-producing Mark McGoldrick, co-head of global proprietary investments, reportedly took home a year-end bonus of nearly $40 million. For comparison, consider that CEO Hank Paulson took home around $35 million, according to public filings. While such payouts represent the highest echelon of the world of outsized bonuses, it's safe to say that "a lot of guys are going to have the best year they've ever had trading," says Paul DeLucia, a managing partner at the Options Group, a New York-based executive-search firm. "

is that 10% of 20% that you keep or 10% of the whole pie?

It's a percentage of your P&L. QuoteOriginally posted by: orangeman44is that 10% of 20% that you keep or 10% of the whole pie?

I can give people a rough guide to what most of the top houses pay on the equity side, obviously prefer not to do it on the forum though, PM me.

QuoteOriginally posted by: farmerThe number I most often hear is 50%. But I'm thinking of opening a commission house in Nevada where you get a blowjob when you make a good trade. You put up all your own money though, and I'm not sure whether to take a cut of profits or, since they will lose, to just jack up the commissions...no comment..

at the big I banks if you cut a formula deal it's usually 10-20% of the P/L

QuoteOriginally posted by: commoditytraderIn my industry, I would say around 9/10 %Yep, I concur on this sort of number. Typically up to 10% before "costs", up to 15% after. "Costs" can include salaries, cost of capital, share of the IT/mid/back office budgets, depreciation of equipment etc. More important is to define the prop book carefully. Flow trading is not a prop book - it is the seat that is worth money, not the trader. In commodities trading we get a lot of "hedge" traders who claim big fat profits but in fact were just selling the output from their oil rigs/gold mines/power stations in the forward market and then claiming the difference between the strike and spot prices as profit. Of course, when the market goes in the other direction they blame the losses on the hedging policy.....Prop trading is almost always financial, not backed out by physical assets and the P&L and risk metrics are clearly defined. On this type of book, 10-15% is the norm in commodities trading. Of course, if the number is too big then expect the rules to change suddenly ("oh, didn't we tell you that it's company policy that bonuses are capped at $x, and the rest of the bonus is paid out in stock options vesting in 2010?").EQ