Trading activity has been weak and Wall Street has been overhauling its payment practices. Large trading houses may see 15 percent to 20 percent in compensation being cut. Compensation is the biggest cost in Wall Street and it’s the toughest to tackle. Another reason for cutbacks in payment is the wary shareholders who can vividly see the weak returns. For the last 2 ½ years payment overhaul has been ongoing to balance the risks; clawback provisions have been implemented to cater for sweet deals that go sour later in the trade, base salaries have been lifted, and bonuses deferred.

Trimming compensation is treachery particularly for a bank’s top stars which most banks fear may jump ship to a competitor. Key features that measure shareholder profitability like return to equity have spiraled downwards lately. Goldman and Morgan Stanley have been diligently working on cut backs; Morgan Stanley has been encouraging its employees to cut back travel and running expenses, blackberry use, it has also cut weak performers in wealth management division. On the other hand Goldman has kept a tight lid on technology and travel costs and is planning to layoff hundreds of US employees.