On the new restrictions about banks paying bonuses coming from the EU:
No off-shoring to avoid rules – rules apply to staff whether they are based inside or outside the EU
This can, clearly, only apply to those organisations which are domiciled, ultimately, in the EU.
I can see that such a set of rules can be imposed upon a $/euro trade working for Barclays in London: I can see it being imposed upon a $/euro trader working for Barclays in New York. Even, upon a Goldman Sachs $/euro trader in London: but I can\’t see anyone being able to make it stick on a $/euro trader in New York working for Goldman Sachs.
Umm, well, maybe: if it\’s a condition of having a licence to operate in the EU that Goldman\’s does not breach such bonus rules anywhere. But I can\’t really see that sticking somehow.
But it certainly can\’t stick on a US only firm employing a trader to trade $/euro from the US.
All of which means we\’re going to have a nice little natural experiment, aren\’t we? Some companies will be able to pay cash bonuses as before. Some won\’t. And we\’ll be able to see, over time, whether such bonuses are in fact necessary to attract the best staff. For such best staff, over time, either will or won\’t migrate to those places and companies which can pay them to them.
And yes, entire markets can migrate over time: how do you think the eurobond markets (which started out as the eurodollar markets) ended up in London in the first place?