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Broker-Dealer Profits Skyrocket 42% in 2017: NYS Comptroller
Traders Magazine Online News, March 27, 2018
Cha ching!
Twenty-seventeen was a very good year for the sell-side, traders and their wallets.
Securities industry profits rose dramatically in 2017 for the second consecutive year and the average bonus paid to financial industry employees in New York City jumped 17 percent to reach $184,220 according to an estimate released by New York State Comptroller Thomas P. DiNapoli.
"When Wall Street does well, the city and state benefit from higher tax revenues," DiNapoli said. "The large increase in profitability over the past two years demonstrates that the industry can prosper with the regulations and consumer protections adopted after the financial crisis. It is too soon to tell how increased volatility in the financial markets might impact profits in 2018."
Pretax profits for the broker/dealer operations of New York Stock Exchange member firms (the traditional measure of securities industry profits) skyrocketed 42 percent in 2017 after increasing by 21 percent in 2016. Profits totaled $24.5 billion in 2017, the highest level since 2010, driven by higher revenue.
After adding jobs for three consecutive years, employment in New York City's securities industry dipped slightly in 2017, averaging 176,900 jobs. Despite recent gains, employment in the securities industry in the city is still 6 percent smaller than before the financial crisis in 2007, while the rest of the private sector in the city has grown by 23 percent.
Although smaller, the industry remains a key component of the city's economy. The industry accounted for less than 5 percent of the private sector jobs in the city in 2016, but it generated more than one-fifth of all private sector wages paid in the city. DiNapoli estimates that nearly 1 in 10 jobs in the city are either directly or indirectly associated with the securities industry.
DiNapoli's office releases an annual estimate of bonuses paid to securities industry employees who work in New York City during the traditional bonus season. Bonuses paid by firms to their employees located outside of New York City (whether in domestic or international locations) are not included. The Comptroller's estimate is based on personal income tax trends and includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in. The estimate does not include stock options or other forms of deferred compensation for which taxes have not been withheld.
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