FX sales - dead end business
After interning at a top fx desk, I was told by a very respectable and top earning sales person that fx sales was a dead end job. The reason being that e-platform already accounts for 70% of the business and can only be a continuing upward trend with more advancement in technology and automation. There's abundant information out in the market that investors/clients no longer need sales people to provide. The market is extremely competitive, margin is thin, value provided by a sales is diminishing when everyone can sell the same spot, vanilla forward & swaps. S&T is undergoing structural changes, I feel like in a few years it's going to be IT consultants who are running the show. Kind of discouraging, do I really want to get into this?
Thats rough. Is this the same for pretty much every desk?
I think in the SME market this is totally true, there is a ton of competition and automation. Western Union now owns a couple of the large non bank brokerage houses, so it will be interesting to see how margins change now that there is a little less competition over pricing.I have heard of banks merging their FX Sales and Interest Rate sales (money market type securities) desk so that one dealer handles both products which I think points to the fact that their is less 'work' required for the dealers with all the autmotation taking place in in the industry. Online dealing platforms by the banks are pretty sophisticated these days.
FX though is a very important asset class and and on the institutional and large corporate side there is still a place for an advice based approach and I believe banks will have a role in providing more sophisticated strategies outside of just spot/forward trades.
I think unfortunately this is true. Global macro in general is becoming more quantitative in nature.
Back to spot, fwd, option fx sales, it is true the automation and electronic trading in those markets disintermediates the intermediary so over time sellside desks will be less useful, ESP inst sales as govs hf corp clients beef up internal desks.
If u love the product you should embrace the quant side and understand there will be structural pressure on comp since plain vanilla fx sales adds less value thN ten yrs ago
To be fair, the high margin products are the more complex ones, so if you focus on those I think you'd be fine.
I agree with Revsly, the more exotic you get, the safer it should be (for a while at least). So try to move over to FX Structuring or even FX Options Trading if you can. Or if you're keen to trade cash, then at least move over to the EM Desk where there's still a good amount of opaqueness in those markets, such as Asian NDFs.
When spot started trading in deci-pips recently this year, it reminded me of what happened to cash equities when trading moved down to pennies from 1/8s etc. While I agree FX will never be the same as it was back in the day and margins will continue to decrease, there will still be the need for -some- institutional salespersons (obviously with less headcount of course). It's a lot easier (and more efficient, from a pricing standpoint) for a global macro HF to move like half a yard of risk by simply calling a few banks simultaneously and paying/giving them all at the same time. Trying to move that kind of size via DMA is too risky; the machines will definitely sniff you out.
But all-in-all, there'll definitely be less need to have a ton of bodies dedicated to FX Sales, especially in G10 and any other liquid crosses. I work in Institutional FX Sales and my boss straight up told me to learn and specialize in EM and Exotic Options if I still want a job in the long-term.
I do agree that this is the truth behind the FX market
However, there is no really pretty perfect career out there, you just have to admit that pros and cons and also try your best to make the best out of it. Remember, life is always unfair.
Recently spoke to a director of FX Sales and brought this question up during our conversation, to which he responded that eFX is going to pose a far greater constraint on the need for FX traders than sales. Perhaps he was biased.
Poor FX Sales at JPM (Originally Posted: 02/18/2014)
A JPM FX sales just killed himself by just jumping off the office building (Chater House) in Hong Kong...RIP...
Did his position open up? I'm interested.
They need more creative exit opps across the pond.
33 years old.. jesus..
On the news today, he actually doesn't work in the front office...his title was: "Associate - Asia Investment Banking Billing Liaison"...
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