Equity traders on Wall Street saw their incentive pools rise 15–25% in 2025, according to Chris Connors, Managing Director at Johnson Associates, with top performers sometimes exceeding that range. Fixed income trading also grew, though more modestly, with incentive pools generally increasing 5–15%.
Connors said equities clearly outpaced fixed income, with results booming across global banks, elite boutiques, proprietary trading firms, and market makers.
The surge reflected both strong markets and intense competition for talent. Connors explained that competitive pressures from prop trading firms and market makers pushed pay higher, particularly for equity sales and trading at investment banks.
Within each incentive pool, allocation varied by role and performance: “the most productive individuals landed at the higher end or above, while weaker performers came in lower.”
Overall, however, 15–25% was “about where we’re seeing equity sales and trading incentive pools trend up versus 2024,” he said, encompassing cash and deferred compensation. Fixed income pools, he noted, rose more modestly but followed a similar trajectory.
The banks’ own results reflect the same story. Bank of America reported $2 billion in equity trading revenue for the fourth quarter, up 23% from a year earlier, while Morgan Stanley’s equity trading revenue surpassed $4.1 billion, roughly 33% higher than in the same period in 2024.
JPMorgan also disclosed higher compensation expenses alongside stronger trading and investment banking revenues. People familiar with year-end pay said those gains translated into average bonus increases in the low double digits for traders, with investment banking payouts at some firms rising by the mid-teens.
While banks do not publicly break down bonuses by desk or role, consultants like Connors note that incentive pools closely follow revenue performance, particularly in trading, which he emphasized is a “heavily production-based business.”
Volatility played a key role in driving strong results. Policy uncertainty and tariff-related developments moved global markets, boosting trading volumes and creating consistent opportunities across cash equities and derivatives.
Connors said initial projections for equity trading bonuses called for roughly a 20% rise, but by mid-year, Johnson Associates’ outlook had moved closer to 25%, with some top performers ultimately seeing increases of 30%. Some traders matched or even exceeded their peak earnings from the pandemic-era boom of 2021, Connors said.
Connors said global banks are not broadly reducing headcount in trading, though weaker performers are often managed out through standard performance processes. Outside trading, however, headcount reductions are expected to accelerate in 2026, driven by AI efficiencies and cost-cutting initiatives that began at some banks in 2025. Trading desks continue to automate execution, rely more heavily on algorithms for tasks once handled by junior traders, and deploy AI across trade surveillance, risk management, and client communication.
Electronic execution is steadily displacing voice trading and relationship-driven workflows. Banks are selectively paying premiums for scarce skills like options or derivatives trading, but production remains the primary determinant of pay.
Looking ahead, Connors said global banks remain broadly bullish on investment banking in 2026, particularly advisory businesses with more predictable pipelines. Trading, however, depends on market volatility, client activity, and individual performance, making compensation outcomes far harder to predict, he said.
“Revenue trends are a key indicator of where incentive pools will end up, but they’re not formulaically linked, and they’re certainly not one-to-one,” he said. He added that some trading businesses could benefit if volatility persists, while other areas may see more muted gains.
Connors noted that the combination of market turbulence and high client activity created record-setting performance at both investment banks and prop trading firms. Some traders may earn what they did in 2021 or even more given record revenues.
For now, equity traders are banking their largest bonuses in four years, but with AI, automation, and electronic execution reshaping trading desks, it remains uncertain how many people will be there to collect next bonuses. The performance of 2026, Connors cautioned, will depend heavily on “market volatility and client activity”, factors outside traders’ control.
