To keep costs low, TJM offers little more than a workstation and a phone. New hires must come with their own clients. If they don’t generate commissions in a given month, they don’t get paid. There are no departments to produce research or issue corporate bonds to entice money managers to call. They’re pretty much on their own.
The trade-off is that brokers get to keep up to 75 percent of their commissions, more than at bigger rivals like Cantor Fitzgerald or Jefferies.
Identity Crisis
For Main, it’s a far cry from his days at Morgan Stanley, when the derivatives salesman catered mostly to proprietary traders who invested the bank’s own money. Banks had to walk away from such trading because of financial regulation. To survive, he’s had to adapt.
In May 2012, when Main got a plaque for his 25th anniversary, the clerk who handed it to him joked that the last person who got one was dismissed. Four months later, he got the call: It was his time.
“After being there so long, it becomes a part of your identity,” says Main, his voice trailing off. “It was pretty devastating at the time, but it’s worked out OK.”
For the past few years, his corner of the world has been in eurodollars, an interest rate linked to U.S. currency held at foreign banks. Because of their complexity -- there are thousands of possible combinations of strike prices and expiration dates -- the contracts have so far resisted the move to computer screens. Some three-quarters of eurodollar options are traded on the floor, according to CME Group Inc., which operates the Chicago Board of Trade.
Old Fashioned
Main tries to give his clients insights they can’t get elsewhere. He’s built a database of large options trades, which helps him divine the intentions of big players and generate trading ideas. As more markets shift to self-service electronic platforms, Main is an old-fashioned, high-service specialist.
During the bond heyday, the question of who brought value to clients and who merely accepted orders wasn’t really a pressing matter. But that’s changed. Last year, the world’s biggest investment banks generated $70 billion in fixed-income revenue, half of what they brought in during 2009.