Commercial Paper Trading

My dad used to work in commercial paper, so I'm trying to go off my memory from stuff he told me when I was growing up.

Basically, commercial paper traders (at least when he was doing it) have to move this stuff on to clients. Its not a big secondary market. Typically, issuers have the banks issue the paper, and the banks tried to push it to clients. My dad's group was actually housed in wealth management and they would try and sell CP on to wealthy clients looking to park their cash somewhere short term. I'm sure their is a lot more to it, and it might be different today, but thats the way he tried to explain it to me growing up lol.

2 probable reasons the banks would trade CP for custy:

1) the bank makes little or no money off of the CP but is able to get other business out of the client.

2) the bank takes between .5 and 5 bp for issuing

my experience is mostly limited to screen-based CP trading i.e. BOOM on Bloomberg.

Thanks for the info. I have been checking the BOOM screen. Pretty interesting stuff. Do CP traders make any money? Is it a good spot to help break into FI trading?

Thanks for the replies.

in most cases CP trading will be much slower and less profitable than other aspects of FI. In general, the more opaque a market is or risky a product is, the more money the people trading that product will make.

As CP is a short-term money-market instrument generally regarded as very safe, it's not a big money maker.

In this economy, any spot you can get is a good spot to break in.

"In this economy, any spot you can get is a good spot to break in." - Excellent and valid statement.

Being on the equity side of the business, is there anything specific you think I should know before going in for an interview? I will brush up on rates and the MM in general, but hoping to not be beaten down w/ intense questions whn I am there. It is for a junior role, but being more prepared is better than being under prepared.

Thanks.