I am moving to an Equities S&T group in a couple weeks on the sales side and am wondering, from our experienced traders (Jimbo, et al), if sales guys have access to a group or trader back book to put on some "prop" positions/strategies?
many thanks.
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I dont understand the question... you want to know if sales men can put on prop trades, using the firm's money? of course not. that is tremendously outside of their mandate.
Unless you were asking whether market makers can put on prop positions, in which case the answer is yes.
even more so...why would a trader take prop views based on what a salesman thinks? it's a no-win situation for him.
double post
If I am getting the question right, can you as a salesperson put on trades? The answer is no. If you think some strategy might work, you pass it on the clients along with research. If this strategy makes money, you hope clients keep coming back for more. As a sales person, you care about your commission not PnL, however your ideas have to be good. I saw some sales people running a "fantasy portfolio" with their ideas, which was to show clients that their ideas are good and can make money.
"As a sales person, you care about your commission not PnL, however your ideas have to be good. "
not entirely true...if the trading book is down on the year, the salesforce aint getting paid....
Jimbo is right to correct me there.
I added that "however" for a reason.
On the other hand, I have seen traders cribbing and yelling at sales people because they had to facilitate a trade for sales at not so good terms. I
yeah you raise a point that i think people dont always understand....sales and trading are partly symbiotic, partly antagonistic.
They both need each other, can't live without each other, but can't stand each other ~ no its not shakespearean dialog, its sales and trading.
Sales gets the orders and tries to get the best execution possible for its clients. They bait them with their own ideas, flogging company research and selective market color. The purpose: clients like you and come back to you for idea execution. Every buy side PM or nowadays trader gets calls from a lot of salespeople from all the banks. Your purpose is to make them pick up your phone and give you an order. Now you turn over to the trader and try to get it done at terms (that you agreed with client). While the trader (i mean flow trader) is trying to protect his book and make money off the spread. In desks like derivs, you want some trades to help in your hedging routines, but there are some you have to do at not so good terms to just humor the sales and hence the client. Yes, there is client focus for both, but the reason I was told we have sales by a trader is to deal with clients. One person can't follow the market and deal with clients. Traders do get pissed at sales, when their client is an informed one. and then you see screaming, yelling and phone banging.
I could live without sales ;-)
you are a true trader Jimbo :)
you work on an equity desk, i'm guessing...sales side?.....
Jimbo - without the salespeople convincing pension funds that there is currently value in that variable strike steepener, or working with the bankers to convince infrastructure companies to raise long dated debt in JPY, where are you going to get your flow from? ;)
Someone who knows something about the products, eh....nice to meet you :-)
Love the power reverse duals and i wish pension funds would buy my range steepeners.
Thanks guys, I appreciate your feedback here. Though this is what I thought, I guess a small part of me wanted to believe it wasn't so.
Am I mistaken to assume that you don't find value in sales ideas?
"Am I mistaken to assume that you don't find value in sales ideas?"
If the question is do salesmen ever come up with good trade ideas, the answer is yes. but there is no upside to letting them trade on these views....if the trade loses, it's ultimately the trader's risk anyway, and if it wins, they claim credit.
it's just not what they're paid to do.
if you're salary/bonus, you don't get paid in a down yr. if you're commission, you do get paid no matter what.
That's not true. Sales and structuring only get paid if the traders do well, because trader P&L is the only "real" money on the desk--sales credits/commissions/etc. are not actual cash. They are a percentage of the traders' P&L. So if that P&L is zero you are screwed....
I don't know if you distribute into mid market or retail, but those salesppl often get paid actual cash, paid out of your book, usually on the settlement date.
but most institutional, sell side sales, will be getting some kind of sales credit attribution for the P&l in the book, not hard dollars....
"Which can really suck in some of the illiquid markets where you do highly structured deals--sales credits are through the roof but traders can't always hedge in those types of markets, so it's definitely possible to see those millions in sales credit evaporate...."
it's true even in 'liquid' markets....day 1 p&l starts bleeding immediately.
I guess I should keep an eye on the groups trading p/l, and leave my best ideas for our clients.
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