Accepted an offer as a Repo trader at a prop shop. Was told through networking that if you are not making money they will show you the door. However, the description of the role is such that the primary responsibility of the desk will be to fulfill the repo funding needs of the company followed by using a separate prop account to “opportunistically” trade individual securities. Obviously it’s firm specific, but I’m curious to know how much of my performance will be based the prop trading. Can anyone provide color on how performance is gauged or speak to the culture of how repo trading at a prop shop is?
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Based on the most helpful WSO content, here's what you need to know about the culture and performance metrics for a Repo Trader at a prop shop:
Performance Metrics:
Culture:
In summary, your performance as a Repo Trader will be heavily based on your ability to generate profits both through fulfilling repo funding needs and through prop trading. The culture is demanding, with high expectations for accountability and teamwork.
Sources: can someone give me insight on the culture at a physical trading house (vitol, trafigura, mercuria), Interview with a Senior Software Developer for a Prop Trading Firm, Can banks prop trade FX and Rates product or not?, JUST RELEASED: New WSO Prop Trading Interview Guide, Trading Own Quant Strategy at Prop Shop
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Potentially trading the specials market frequently.. and reinvesting the cash as GC to earn that spread?
Hey there
Not sure my answer will be totally relevant as you work in a prop shop while I work at a bank, also in a very atypical market, but as there are no better answers yet will contribute my two cents.
I am a REPO trader for a large bank with one of my major duties being obtaining funding (therefore, doing direct repos). My performance is measured through the spread between the deal rate and internal FTP (Funds Transfer Rate). FTP is the rate my bank is willing to pay me for the funds I borrow in the money market. For example, if i do repo at 2.00% while ftp is 2.25%, 0.25% will be my profit realized. Obviously, the greater is the spread, the better is the performance.
In your shop you might not have exactly such an ftp system, but the general idea of shop setting some desired cost of funding, exceeding which in your trades will generate you pnl, should still hold
I appreciate the color. That being said, do you believe these assumptions would hold given that we are not (yet, and for the foreseeable future) a FICC member? From my rudimentary understanding not being a FICC member gives us a distinct disadvantage as we are unable to keep the FTP costs that you mentioned at a specific level.
If I made any incorrect assumptions please disregard as I have only been on the desk for 5 days. LOL
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