Repo trading?
Anyone do repo trading or know anyone who does? Would love to hear information with respect to day-to-day (I’d expect it’s quite flow-y), WLB, job security / long-term progression, comp profile over time, etc. Surprisingly little about this spot despite it being a liquidity center for banks - as I understand it many of these desks have mandates at times not tied to PnL so perhaps that drives some of the “lack of prestige”.
work alongside repo desk from time to time myself.
it’s quite flow/volume driven like you said.
would be interested in hearing the pay/day to day routine/career prospect as well
Bump
i know a few guys trading repo at a BB. lots of action happening in broker markets so the broker connects are definitely an upside, pay/hours err to the lower side in trading but obviously still more than enough for decent traders.
Repo trading is relatively easy to get hand on, and doesn’t really require you to take any proprietary risk; which is a blessing, as you have all the time to learn everything you desire without stress over job security. It is below average trading desk in terms of prospective bonus, despite that it can generate one of the biggest and consistent pnl across the floor; great place to start for a few years but don’t stay on for too long, although some personalities are very happy to stay on a stable desk such as repo trading.
Banks with biggest commercial branch are the biggest market players, as they have the balance sheet and counterparts risk limit to facilitate the business.
There are a lot of relative value focused hedge fund which leverage through repo market, so a seasoned repo trader can add a lot of value for a PM, which sets up a good entry point for you into the buy side and develop further from there, if that’s what you wise to pursue.
Can you speak to why one might want to avoid staying on too long? Is that comment purely driven by lack of taking prop risk?
Really depends on individuals and how “curious” they are about the market. Most repo trader I’ve met are happy with their role; there are always ways to take ownership of the repo business, by expanding client base, expand product offerings (pioneer into credit repo), you CAN take proprietary risk (but understand that on fx spot desk for example, you are forced into taking view every minute and can often change on headlines, the mind set and risk taking appetite is very different; in reality it is much lesser grand, but you will never find out if you stay only in repo trading), and you can be incredibly technical and engage ideas with clients etc… it really depends on how you want to take it.
No matter what product you trade, people tends to get a bit bored facilitating the same flow business after a few years, and the learning curve for repo trading is obviously shorter than the likes of rates options trading for example. So moving desk will open ideas to you and learning from different traders, but once again, it really depends on what the individual want.
One other thing I forgot to mention is that, some buy side fund are already establishing their own repo trading desk to access better liquidity during market stress, so there’s another opportunity to move to buy side there.
Repo is literally Volcker exempt, technically one of the last places you can actually prop trade. Afaik most (>80%) of the repo pnl is made taking a position on where borrows are going to be on various collat. based on rates, client needs, macro, etc. The only downside (could be an upside) is charging for borrows on shorts makes everyone else on the floor dislike you.
I'm assuming repo market is getting a bit more "fun" these days with all the rate increases and overall macro volatility.
Depends.. lot of money market funds park their cash at the Fed.. 2.2T as of today.. but higher rates do help creating some spreads
Fed providing liquidity closing spreads, bad for PnL.
Can someone comment on Delta One desk? Pay/job security etc.
I know product-wise it’s quite different but to me they are both flow/volume driven and on securities financing side?
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