Hybrid Securities and structured products

Does anyone know anything about this? The type of hours and skills needed or desired? It seems to involve a lot of accounting, regulatory understanding and law, so as to get return. I know very little, so insight on hours, type of work and whether it's a hot product would be great.

16 Comments
 

"its set up for corporates to pull higher yield."

you've just described almost every structured product. can you be more specific about what specific product you are thinking about? even tax arb stuff is handled on trading desks.

 

not done on a trading desk because it isn't traded - it is issued as a way to make greater return than an equity linked instrument but have the tax protection of a debt instrument. It's kind of a bespoke structured product if that makes sense.

 
Best Response
ratulnot done on a trading desk because it isn't traded - it is issued as a way to make greater return than an equity linked instrument but have the tax protection of a debt instrument. It's kind of a bespoke structured product if that makes sense.

No it doesn't. first of all, these products all generate exposure to something so the risk is being managed somewhere. and that 'somewhere' is a trading desk. secondly, most structured products are "bespoke" so that doesn't really help either. what is the actual structure you are talking about? what is the return, and what is it contigent on?

also, what do you mean by the "tax protection" of a debt instrument? i see structured notes all the time that offer greater than equity returns. heck sometimes they're even directly linked to equity.

 
Jimbo
ratulnot done on a trading desk because it isn't traded - it is issued as a way to make greater return than an equity linked instrument but have the tax protection of a debt instrument. It's kind of a bespoke structured product if that makes sense.

No it doesn't. first of all, these products all generate exposure to something so the risk is being managed somewhere. and that 'somewhere' is a trading desk. secondly, most structured products are "bespoke" so that doesn't really help either. what is the actual structure you are talking about? what is the return, and what is it contigent on?

also, what do you mean by the "tax protection" of a debt instrument? i see structured notes all the time that offer greater than equity returns. heck sometimes they're even directly linked to equity.

Similar to convertible bond - may be a hybrid mortgage security - but that just sounds awkward.

 

step back. what is the actual structure under consideration?

And maybe you'd be working on a banking desk that puts these together. there is a trading desk somewhere managing the risk, but you might not interact with them.

 

it is most definitely a traded product. I dont know why you'd be arguing this point especially with a guy who has proven to know the business time and time again. here is a job description:

Associate, Hybrid Capital Trading in New York, NY to manage a relative value credit trading ledger for the Hybrid Capital business. Requires Master's degree in Business Administration, Finance, Economics or related field or equivalent plus 1 year of experience trading derivatives and cash instruments.

 

Here's the thing... hybrid securities and structured products could mean a lot of different things depending on where you work.

The term "structured products" sometimes doesn't translate equally across different places. For example the structured products team at Barclays or Nuveen (e.g. ETF's) could have a different scope/function and generally mean something different than the structured products team at Goldman Sachs.

From what I can gather, the general scope of a banker's role in this area is one of due diligence on the issuance. I've never understood the role to be very quantitive. The gist is that you work with regulatory and legal in order to properly define the scope and terms of the product features (e.g. is it going to be issued in tranches? will it be linked to an equity, a commodity, a fixed income product or a broader index?, how will it be traded? etc.) In this regard, the work can become complex as the next generation of structured products can be much more sophisticated than the previous etc.

Jimbo, however is ultimately right. Once these products are issued, ALL hybrid securities and structured products will eventually be traded somewhere. The whole point is that they'll ultimately be offered to a retail market, no?

Finally, as far as hours... why do you care? If it's going to be a first job out of college, be prepared to work your tail off.

What amazes me about you kids today is the emphasize on the $$, the hours and the lifestyle.

I feel your generation of undergrads looks at things backwards. You first consider $$ and prestige and if it's not there, you don't even consider it.

Instead what you should do is seek a career in something that interests you period. Be it finance, banking, law etc. Next, get the best job you can and do your best where ever you are. If you do these things right, the $$ and prestige follows naturally.

 
Jimboannd aadpepsi nails it!

Oh stop.

Listen, I'm idle at work this morning... so I have time to be the wise sage :-)

'eh I also type like 110+ wpm so I can post a response at the speed of light, HA!

 

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