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Liability traders are prop. traders. They use the firm's capital to take their own positions.
I don't think I've heard the term 'coverage trader', yet, but I'd imagine that they are responsible for providing flow to clients. There is a prop. component to flow desks.
quote :I don't think I've heard the term 'coverage trader', yet, but I'd imagine that they are responsible for providing flow to clients. There is a prop. component to flow desks.
What kind of backgroud to these "flow-traders" have? I am interviewing for a job as a sell side-trader, but they havent given me the details of it. I know i will not be doing any prop trading.
Liability trading occurs when a sell side trading desk takes a stock position (block) to facilitate client orders and are willing to make markets for clients.
Sell Side Liability Traders help Buy Side Firms get out of positions when there are no other buyers. How do they do this? Let’s say a buy side firm wants to sell a block of stock. However, there are no bids and liquidity has dried up. Of course, a sell side firm will never refuse a trade because they get commission for performing the trade. So the sell side firm will buy the block from the buy side firm and make a profit of 2cents – 5cents commission on that trade. Now the sell side firm is long a block of stock and that block of stock sits in the sell side firms “inventory book.” It is the Liability Traders job to mitigate the inventory books risk exposure and flatten that position out of the inventory book . It could take a while, but sell side firms also send e-mails out a couple of times a day to their clients that highlights the sell side firms “flow." In that flow list, the sell side firm will show that they have a block of stock for “sale.”
Depends on the desk. On mine, there are applied math majors, CS majors, and engineers.
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