This is the usually the season to start dropping subtle hints that unless your bonus meets expectations, you’ll be looking for alternative employment come the New Year. Blatantly, the annual bluff won’t work any more.

Not only is banking recruitment likely to remain depressed in early 2009, but threatening to leave for a hedge fund – a big driver of traders’ compensation for many years – no longer carries any weight.

Bloomberg reports that hedge funds experienced their worse monthly drop for a decade in September, hurt by losses on commodities and convertible arbitrage strategies. UK hedge funds are also reeling from their inability to access $70bn frozen in Lehman.

Banks’ compensation committees will also be aware that even if underpaid traders are able to migrate to hedge funds, they won’t be able to improve their financial position by doing so. This year’s poor performance has left nine out of 10 hedge funds below the high-water mark at which they’re able to charge the performance-related fees which have historically contributed to their very handsome bonuses.

The disappearance of hedge funds as a lever for jacking up pay will have a far more substantial impact on compensation than the FSA’s meekly worded request that banks moderate payouts according to risk and spread the load over several years,

For the next few years, most traders will have to accept whatever they’re given. Instead, it will be the turn of in-demand operations and risk staff to boost their remuneration by threatening to go elsewhere. When details of Lehman’s last-minute $100m bonus scheme emerged earlier this week, it was telling that $16m of it had been allocated to Benoit Savoret, the chief operating officer, who was threatening to leave for a rival. In testing conditions, it is managers rather than risk takers who get the buybacks. How times change.