[ by Melanie Gretchen ] What do hedge funds have that Wall Street doesn't?  For starters, they don't have the Dodd-Frank Reform Act's Volcker Rule, limiting traders' income – and job-worth. Mass Exodus. Wall Street's biggest banks are losing its billion-dollar traders, as banks slash or defer pay and reduce the amount they’re willing to wager, amid regulatory changes à la Dodd-Frank.   In the past 13 months,  almost 2 dozen of Wall Street's most-profitable credit traders have fled for greener pastures as risk-taking goes the way of proprietary trading at Morgan Stanley, JPMorgan Chase, Goldman Sachs, and Morgan Stanley. Case in Point: John Silvetz. In the 5 years that he made about $700 million for Deutsche Bank AG by trading corporate bonds and credit derivatives, the amount of his annual bonus paid in cash dropped to 20% from almost 70%, according to people familiar with the matter, who asked not to be identified because they aren't authorized to discuss compensation.  Finally, in September, Mr. Silvetz, 37, joined hedge fund BlueCrest Capital Management LLP – the last of a trio of New York debt traders who departed after making $1 billion for the German lender in 2 years.  [CI Note: Can you blame them?] "People who were contributing quite a bit to the overall profitability of the firms are forced to move on," said Doug Shaener, managing partner at Quest Group, a New York-based executive search consulting firm that specializes in financial services.  "You’re seeing individuals looking to go to places where they obviously aren’t as regulated, where they don’t have as many restrictions in terms of their trading." What Hedge Funds Have to Offer. The going rate at hedge funds for managing director-level traders is a salary of about $200,000 to $250,000, said Michael Karp, managing partner at New York executive recruiter Options Group.  In addition, bonuses at some of the largest hedge funds have amounted to as much as 12% of traders’ profits, or an even bigger percentage of their earnings after the firm takes a 2% cut, according to Options Group. Funds' highest earners get 50% or more of their bonuses, according to New York-based compensation consulting firm Johnson Associates Inc. One Man's Loss is Another Man's Gain. In contrast, Wall Street's cash bonuses were capped last year, according to Bloomberg:

• Barclays Plc: £65,000 ($105,000)
• Deutsche Bank: €100,000 ($131,000)
• Morgan Stanley: $125,000
• Bank of America: $150,000.

"Many of the major investment banks just don’t have the capital they used to, and a lot of that is because of the Volcker rule," Marc Lasry, co-founder of Avenue Capital Group LLC, said May 2 in an interview with Bloomberg TV’s Stephanie Ruhle at the Milken Institute Global Conference. Open Market. Unfortunately, for the banks, greener pastures aren't that hard to find.  As Michael Karp, managing partner at New York executive recruiter Options Group, said: "It’s a buyer’s market for the hedge funds.  People are figuring out how to trade in this new world." Some of the most high-profile departures:

• Prakash Narayanan and Thomas Curran, who together made more than $1 billion for Germany’s biggest bank in 2009 and 2010.
• Brian Maggio left Barclays’s credit-trading team in New York in March for Millennium Management LLC; in the 5 years ended in December, he made an estimated $375 million for Barclays and Lehman, where he worked until the firm filed for bankruptcy in September 2008.
• Jason Quinn and Peter Agnes left Barclays for Caxton Associates LP in New York.
• Matthew Knopman and Philip Ha, credit traders, left Goldman earlier this year, with Mr. Knopman starting at Anchorage Capital Group LLC this month and Mr. Ha going to MKP Capital Management LLC.
• Rob Jackson joined Cyrus Capital Partners LP from Goldman Sachs in February.
• Jerry Cudzi, high-yield bond trader at Morgan Stanley, left to head U.S. credit trading at TCW Group Inc., which was managing $73.3 billion in fixed-income assets as of March 31.
• Stefano Galian, previously a credit trader at Deutsche Bank, and Eugene Gokhvat, formerly of Morgan Stanley, joined BlueCrest this and last month respectively.

For further details, go to [Bloomberg, 5/7/12].