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20 Oct 2007, 00:40
Kudos
Bookmarks
Hi all,
I have been trying to understand about the I Banking industry and went thru loads of guides like wetfeet/vault/day in a life etc to understand more about I Banks and the kind of jobs they have. I briefly understood that broadly it can be classified as
1. M&A (including underwriting for IPO's etc)
2. Sales and Trading
I have a few queries. Request someone knowledgeable about the industry clarify the same.
1. In the Sales and Trading, I understand that there are various "desks" like fixed income, commodities, derivatives, currencies etc. I did not find any guides highlighting the differences between these though one particular guide mentioned that the culture and the skills required are vastly different for each of these desks.
Can someone explain how and why that is the case and how they are different. If someone can also explain the various desks available and how the job and skill level varies between each desk, nothing like that. And some talk about the money wont hurt.
2. Would sales guys also have a different lives in different desks or will they be just selling different things, but basically the same way?
3. I understand that the I Banks are called sell side firms. What kind of career path do the traders have after 2-3 yrs in trading with these firms. I heard that they try shifting to buy side firms. Can someone discuss more on this. Why the shift happens? Is it coz money is higher. Are all asset management firms, buy side firms? Are hedge funds one type of asset management firm. If they are one type, are there various types even in asset management similar to the various desks in trading.
4. How easy is it to shift tracks within desks. Say today I trade equities and then shift to commodities etc. Is it very different or is it all one and the same kinda job profile.
5. If I want to be safe and join a desk which will open more career options later on, which one is better?
These kinda answers, I could not find much from various websites. All websites talk about lot of money, lot of pressure etc in I banking world. But not much into the details of job profiles. The websites discuss about I Banking and Sales & Trading in general. Not about the individual desks.
So, please help.
RPK
I have been trying to understand about the I Banking industry and went thru loads of guides like wetfeet/vault/day in a life etc to understand more about I Banks and the kind of jobs they have. I briefly understood that broadly it can be classified as
1. M&A (including underwriting for IPO's etc)
2. Sales and Trading
I have a few queries. Request someone knowledgeable about the industry clarify the same.
1. In the Sales and Trading, I understand that there are various "desks" like fixed income, commodities, derivatives, currencies etc. I did not find any guides highlighting the differences between these though one particular guide mentioned that the culture and the skills required are vastly different for each of these desks.
Can someone explain how and why that is the case and how they are different. If someone can also explain the various desks available and how the job and skill level varies between each desk, nothing like that. And some talk about the money wont hurt.
2. Would sales guys also have a different lives in different desks or will they be just selling different things, but basically the same way?
3. I understand that the I Banks are called sell side firms. What kind of career path do the traders have after 2-3 yrs in trading with these firms. I heard that they try shifting to buy side firms. Can someone discuss more on this. Why the shift happens? Is it coz money is higher. Are all asset management firms, buy side firms? Are hedge funds one type of asset management firm. If they are one type, are there various types even in asset management similar to the various desks in trading.
4. How easy is it to shift tracks within desks. Say today I trade equities and then shift to commodities etc. Is it very different or is it all one and the same kinda job profile.
5. If I want to be safe and join a desk which will open more career options later on, which one is better?
These kinda answers, I could not find much from various websites. All websites talk about lot of money, lot of pressure etc in I banking world. But not much into the details of job profiles. The websites discuss about I Banking and Sales & Trading in general. Not about the individual desks.
So, please help.
RPK
21 Oct 2007, 06:55
Kudos
Bookmarks
I don't know a whole lot about this stuff but I'll take a stab at it.
SALES AND TRADING -- The sales guys and the traders work closely together. The sales guys are typically strong with soft-skills, so they can entertain clients and do the smooth talking, while the traders are more quant-oriented, although many traders insist a monkey could do their job.
95% of people who call themselves traders are "market-makers," nothing too glamorous, you're just following a strategy set by the bank, and you manage your inventory buying and selling securities all day making a profit on the spread.
The other 5% are proprietary traders. These are basically speculators, people who are trusted by the bank to turn buckets of cash into more buckets of cash. These jobs are hard to come by, so much so that it's probably not realistic to think you can land one of these jobs without first working as a marketmaker.
ASSET MANAGEMENT
Sell-side means you're working for a bank that is trying to sell securities to people/institutions. The sell-side equity analysts analyze equities and find a way to say, "This is a great stock." Obviously there's no conflict of interest here, it's like when a used car salesman gives you his objective opinion on how great his '84 Pinto is, he's really just being straightforward and honest.
Buy-side means you work for an institution that is not selling, but purchasing for the purpose of investing. So a hedge fund or a mutual fund management company like Fidelity. The difference here is that rather than analyzing equities (or bonds or whatever) and cranking out reports that say how awesome these instruments are, you are interested in finding out what's really going on because your job is to get the biggest returns possible with a set amount of risk, so you want to know everything about your investments possible.
So the big difference between sell-side and buy-side is that the purpose of your analysis is different. I think generally speaking compensation is roughly equivalent when you start out, but as you move up it's probably better to be working buy-side. It's also thought of as more prestigious because everyone wants to work at hedge funds and have the opportunity to switch jobs within an organization like that.
So like I said, this is just my cursory understanding of this stuff, no doubt there are better explanations out there.
SALES AND TRADING -- The sales guys and the traders work closely together. The sales guys are typically strong with soft-skills, so they can entertain clients and do the smooth talking, while the traders are more quant-oriented, although many traders insist a monkey could do their job.
95% of people who call themselves traders are "market-makers," nothing too glamorous, you're just following a strategy set by the bank, and you manage your inventory buying and selling securities all day making a profit on the spread.
The other 5% are proprietary traders. These are basically speculators, people who are trusted by the bank to turn buckets of cash into more buckets of cash. These jobs are hard to come by, so much so that it's probably not realistic to think you can land one of these jobs without first working as a marketmaker.
ASSET MANAGEMENT
Sell-side means you're working for a bank that is trying to sell securities to people/institutions. The sell-side equity analysts analyze equities and find a way to say, "This is a great stock." Obviously there's no conflict of interest here, it's like when a used car salesman gives you his objective opinion on how great his '84 Pinto is, he's really just being straightforward and honest.
Buy-side means you work for an institution that is not selling, but purchasing for the purpose of investing. So a hedge fund or a mutual fund management company like Fidelity. The difference here is that rather than analyzing equities (or bonds or whatever) and cranking out reports that say how awesome these instruments are, you are interested in finding out what's really going on because your job is to get the biggest returns possible with a set amount of risk, so you want to know everything about your investments possible.
So the big difference between sell-side and buy-side is that the purpose of your analysis is different. I think generally speaking compensation is roughly equivalent when you start out, but as you move up it's probably better to be working buy-side. It's also thought of as more prestigious because everyone wants to work at hedge funds and have the opportunity to switch jobs within an organization like that.
So like I said, this is just my cursory understanding of this stuff, no doubt there are better explanations out there.
ROTFL
