Desk Analyst?

JCI:

Just for the sake of thoroughness, I've heard (once or twice) the term "desk analyst" being used to describe the Strategists ("Strats"), who sit on the trading floor.

This is how I've heard it used. Say a salesperson at a bank that covers us calls up with an "idea" (aka some paper they want to move). They'll usually offer to have us speak with the desk analyst for the industry/who covers the issuer (whether they have someone who specifically covers the company depends on the bank and the issuer).

My understanding is that these analysts sit with S&T on the other side of the Chinese wall from the corp fin analysts and the research analysts the bank publishes but I'm not 100% sure on that.

As far as I've seen, the desk analyst is sort of a grey-zone term. We have "desk-analysts" in our research department as well as some that are located on the S&T floor. Desk analysts seem to be focused on rapidly developing situations in which they may have no sector background and generally provide a capital structure and/or M&A perspective. The big distinction between the former and latter is that the former are governed by research-related compliance rules and can thus have price targets and recommendations unlike the latter.

What sort of products do these guys usually cover? Are there any more details about what differentiates the background and functions of the desk analysts that sit on the desk as opposed to those that sit off of it?

Also, do desk analysts usually move into a trading role or vice versa?

Appreciate anymore insight from anyone.

Thanks for the insight! +1.

One last question which I'm not sure if is answerable: are desk analysts more or less prolific than publishing or research analysts? I was recently reading that with the intro of Dodd-Frank, many BB are getting rid of desk analysts or shifting them elsewhere due to closing of prop desks, etc.

whalesquid123:

SB'ed

I don't think FX/macro desk analysts exist though (at least not analogous to the setup in credit).

From what I've heard, most banks will make their entry-level credit traders start out in desk analyst roles to familiarize them with credit analytics, but they move on after ~1 year. So how does one STAY a desk analyst?

How frequently do desk analysts turnover? Is there a lot of churn or are there enough senior desk analysts that stick around and train the new blood well? Do desk analysts mostly go to established credit funds like Oaktree or Third Ave, or do they start their own funds? Most of the new credit HFs I read about seem to be started by senior credit traders exiting banks.

Not sure what you heard or who told you but there are fx/ rates/ macro desk analyst. You just don't know them.

Yes, often someone new to credit will be asked to do a stint with the desk analysts. It's a way to learn credit quickly and correctly to have a good base. Nonetheless, that's not the REASON the role exists. Like I said, it technically the toughest job out of sales, trading, and analysis, so clearly there have to be experienced, senior analysts to train new credit hires, but primarily and more importantly, to be a trustworthy guide when a situation occurs or when trade ideas are needed. One stays a desk analyst by showing interest in the role when they intern or get hired, and then work hard and keep getting better. It's like any other role at a bank... Not sure what exactly youre asking. Turnover is what it is, but not by definition higher for desk analysts that anyone else of the trading floor.

I guess an analyst can start a fund. Starting a fund is not dependent at all on being a salesperson, trader, or analyst. It is dependent on having strong relationships with people that are possible investors. I suppose logically you'd think if you have a strong track record then people would throw you money, not the case AT ALL. It's very difficult to get people to invest and this business is VERY relationship driven. Plus, like I said, just because you're a good market maker doesn't mean you can generate significant p&l when you no longer have the benefit of bid ask spread and resources and insight into client flows as you do on a sell side desk. Moreover, as a fund you need a very scalable methodology to your strategy you can effectively pitch to investors.

Do you work in the industry? Where do you get this info "you've heard"?

whalesquid123:

I've interned on rates/fx/commodities desks (and am working on one of them). There are no desk analysts (strict non-publishing) at my bank or those my friends are at. Sure we will use the research guys to mage some charts when we want to look at some specific data but don't give their ideas much weight. Their main job is to publish and service clients. If you know of any banks that have these macro desk analysts (analogous to the credit setup, as I said) I would like to know what they are (pm if you want).

I know people on credit. That's where my credit-specific info comes from.

I see. It's very possible that your bank doesn't have desk analysts. Generally from speaking with people and at my bank I know fx and rates have desk analysts. Depending on the bank, specific skills/experience of the talent, and client requests, desk analysts can be more quantitative vs. fundamental (or both either together or separately). Also, if a bank is very strong in a particular product, they will tend to have a strong desk analyst team. The buyside likes using banks that see the best/biggest volumes/flow and a desk analyst to talk to makes each call a "one stop shop". Not to say a bank is crappy if they don't, but logically it makes sense to beef up a strong dept.

I work at a bulge bracket considered to be the #1 bank in fx (though sometimes we trade off and on with another bank) and we're quite strong in credit, especially in the last several years. Should narrow the range for you. Fx had fundamental desks analysts as well as a small team of fx technical strategist (who also are actually just macro desk analysts and look at ANYTHING that's not single name stocks or bonds).

CreditAnalyst85:

whalesquid123:

I've interned on rates/fx/commodities desks (and am working on one of them). There are no desk analysts (strict non-publishing) at my bank or those my friends are at. Sure we will use the research guys to mage some charts when we want to look at some specific data but don't give their ideas much weight. Their main job is to publish and service clients. If you know of any banks that have these macro desk analysts (analogous to the credit setup, as I said) I would like to know what they are (pm if you want).

I know people on credit. That's where my credit-specific info comes from.

I see. It's very possible that your bank doesn't have desk analysts. Generally from speaking with people and at my bank I know fx and rates have desk analysts. Depending on the bank, specific skills/experience of the talent, and client requests, desk analysts can be more quantitative vs. fundamental (or both either together or separately). Also, if a bank is very strong in a particular product, they will tend to have a strong desk analyst team. The buyside likes using banks that see the best/biggest volumes/flow and a desk analyst to talk to makes each call a "one stop shop". Not to say a bank is crappy if they don't, but logically it makes sense to beef up a strong dept.

I work at a bulge bracket considered to be the #1 bank in fx (though sometimes we trade off and on with another bank) and we're quite strong in credit, especially in the last several years. Should narrow the range for you. Fx had fundamental desks analysts as well as a small team of fx technical strategist (who also are actually just macro desk analysts and look at ANYTHING that's not single name stocks or bonds).

So you're at DB. FX i think #1 DB, #2 Citi and #3 UBS (with Citi and UBS basically tied).

Thanks for all of the great responses.

@CreditAnalyst85, how do banks usually hire for these kinds of positions (namely, desk analysts)? Do they have many junior guys on desks (from what you've described, desk analysts are probably a little sharper and more experienced than what I imagine most junior researchers are)? I'm just trying to imagine how one would go about gettting a job as a desk analyst, as I have never seen too many desk analyst job postings anywhere.

Regards

Anihilist:

Thanks for all of the great responses.

@CreditAnalyst85, how do banks usually hire for these kinds of positions (namely, desk analysts)? Do they have many junior guys on desks (from what you've described, desk analysts are probably a little sharper and more experienced than what I imagine most junior researchers are)? I'm just trying to imagine how one would go about gettting a job as a desk analyst, as I have never seen too many desk analyst job postings anywhere.

Regards

Well you have to remember that what you're saying is the case with anything on the trading floor. A new hire will be too inexperienced to trade on his/her own or call accounts if he or she is joining a trading /sales group.

As far as I've seen, it's like any other process, but I suppose there tend to be fewer spots for desk analysts. The offset is that most undergrads don't want to do it/don't think to do it because it "seems" so sexy to trade the hottest product at the moment, and they typically don't understand just how careers progress and the doors that open (or close) when you pick certain paths.

Honestly, if it's what you want to do, get a head start, contact people at the firm and learn from whoever takes your call. From there, it's up to you to be smooth enough to express your interest in a desk analyst position without making them feel used. You'll likely have to stay in touch, visit often, eventually make your interest in being hired all but clear, and persistent but not annoying. They have to think "wow this kids really peristent and seems like he would actually be a hard worker and smart at this job." People may disagree with me, but waiting until HR tells you the official placement process has begun or waiting until you hit the first day is already too late.

whalesquid123:

You seem to be implying that the desk analyst path is a smarter long-term career choice than trading (at least in credit) and that's something I'd like to explore further. Let's assume no one gets to leave for the buyside since we established it's tough to raise $

Can you talk more about the dynamic between desk analysts and traders? For example, I'm curious how much "credit" accrues to desk analysts for their recommendations. If a trade they recommend goes well but the trader owns the risk, how do they divvy up the comp? And vice versa.

What are your hours like relative to sales and traders? Aren't the hours pretty brutal given the amount of stuff you have to comb through?

I would say that's probably taking it one step further than I am. What I'm saying is that desk analysts tend to have more options/transferable skills than many other positions in S&T. The thing with trading or sales is that it requires a very narrow skill set (trading more so). However, if you're good you get paid great. And that's wonderful if that's what you want to do. Anecdotally, I've had senior traders want to go through credits and love learning from me because they realize the trading skillet is very limited in some ways.

That said, I'm not saying you can't make great money as an analyst. But it depends on the firm. Some firms purely have desk analysts and they are technically a cost center. Your relationship with you head trader, your trade ideas' profitability, etc. will likely dictate your comp. You technically could get screwed because even if a bad trade hurts your credibility, the trader has to answer for the trade idea in the end if it blows up. So even when it does well, traders may want credit for "pulling the trigger". It's a dance trying to get everyone happy and no one ever thinks they get paid quite enough, right?

HOWEVER, if your bank gives you a small prop book (and, people, please don't start with the Volcker rule...) then you get more freedom in putting money behind your ideas. Plus you have an independent P&L.

Desk analyst are basically buyside analysts. So that's one option. And at that point, money is definitely put behind your ideas. Also, if you tend to specialize in a sector or few, you could make a move to that industry. Exit opps are just better.

Sure you may have ex-flow traders at a hedge fund. But ask yourself (1) how much is their job execution, (2) is a flow trader that has good prop ideas the norm or an exception, (3) how good is a flow trader once there is no bid ask spread benefit. That's actually unfair since market making by definition is meant to capture the spread. But if you want to make the point of trader having the buyside as an option, then it's a fair point.

Generally, as a desk analyst you need to not just learn your names/how to make calls in your product area, but also develop a relationship with your trader(s) so they TRUST you. Once they do, they will lean heavily on you and should pay you well for helping them avoid bad names/make money.

This is all to say that I think you should do what you really enjoy. Who cares if there are slightly better exit opps in one vs. the other. Most never take advantage if the opps, even though this site is obsessed with the concept. It may be the case with banking, but sell side s&t is generally a true career path. Plus why sacrifice what you'd really want to do for opps? That said, you have to really so your research on what exactly each position entails... And that's the problem for young people just getting in. I went through that but finally ended up where I wanted to be. This site can be a great resource for that.

Trading floor I worked on in HK had an equity derivs strategist sat next to the sales guys, from what I saw he was just updating models, firing out stuff internally, speaking to the sales desk quite alot.

First post for me in a while... WSO added a lot of value for me so always happy to give back despite my issues on the inner politics here.

My experience as a sell side desk analyst is very different from the described above. By title I am a VP but but my role is still desk analyst. I like to think of the desk analyst as a utility role, part research/trading/sales. My tasks range from monitoring news in my space, trading a decent percentage of client orders, interacting with our research team liasing between them and the sales team. I also spend a good amount of time speaking with clients on the phone on our ideas and fielding their questions. I would not compare myself to a buyside analyst much closer to a buyside trader.

The experience seems to vary greatly based on product and different firms.

whalesquid123:

SB'ed again.

To be honest I agree with a lot of what you have to say about trading. Even market-making isn't that easy - many try and fail - much less on the buyside without the benefit of bid/ask and seeing the flows. I think one can become a better trader with practice and discipline but becoming a star trader doesn't seem like it can be learned/taught (and maybe there's some luck in there too).

On the contrary (and correct me if I'm wrong), it's well within a smart person's ability to become a good desk analyst/researcher if you're hardworking and detail oriented enough. You derive an edge by combing through research and hopefully finding the details that the market has missed. Seems to be a more reliable way of deriving an edge than however successful traders do it.

http://www.bloomberg.com/news/2012-05-07/billion-d...
Clearly credit traders can move to the buyside. I haven't read anything about credit desk analysts moving in similar numbers, but it's entirely possible that we just don't hear about it in the news. So although I agree with your fundamental reasoning behind desk analysts having "better" opps than traders, it doesn't seem borne out by numbers. What do you think?

Yes, market making is a skill that can be taught. Generally prop trading is more of an art and also takes a lot of conviction. I think start market makers have this trait because they aren't scared to do huge size and take down positions. The difference in what I've seen between a trader's edge and a desk analyst's edge is that traders areVERY in with the technicals and trends. But those work until they stop working. They can stop working for a variety of reasons, but if there's a fundamental reason why, then the desk analyst will know that. So gaining an edge using a blend of technicals and fundamentals is a good approach since you know the "what" as we'll as have some idea of the "why". However, analysts get help from the trader because no one know the trends better than the trader.

I think as far as what the press reports, it's two things: (1) traders are the most glamorous to report on, (2) desk analysts always move back and forth and it isn't very newsworthy, (3) remember that just how the sell side traders use the desk analyst for help on ideas, those trader that leave for the buyside have analysts there to help AND the buyside has more color since they talk to all the shops. You have to be careful about what's reported in the news. It's usually not the whole story... After all, all they have to go on is what people leak.