Repo trading desk

Hi all,

I am due to start as an analyst on a repo (aka fixed income financing) trading desk at a BB bank. I am really interested in quantitative stuff (come from a very quantitively orientated STEM undergrad) and macro, so I'm overall happy with the desk.

However, I understand that repo is quite a simple product, and I have also heard there aren't too many opportunities to do traditional market making, due to the nature of the product. From my experience/own learning, I'm really interested in macro products and derivatives, and I really enjoyed shadowing FX/rates/metals derivatives trading desk during my internship.

In light of this, I have a few questions. Any info/advice/guidance from anyone would be greatly appreciated:

Would it be possible to transfer to a FX/rates/commods derivative desk at some point? What would be the best way to go about doing this, and how could I make the most out of my time on the repo desk? If I were to make a move to another desk, how could I harness the skills and experience from sitting on a repo desk? Would it benefit me going back to uni and getting my masters degree?

Obviously, I'm going in with an open mind, however I wanted to ask the question early just in case I want to make the switch.

Thanks!!


 

Ahoy there! Welcome to the thrilling world of repo trading at a BB bank. It sounds like you're embarking on an exciting journey with a keen interest in the quantitative and macro side of things. Let's dive into your queries and chart a course through the vast ocean of possibilities.

  1. Transitioning to FX/Rates/Commods Derivative Desk: Absolutely, transitioning to a desk more aligned with your interests in macro products and derivatives is possible. The best way to go about this is to:

    • Network internally: Build relationships with traders and managers on the desks you're interested in. Express your interest and seek their advice.
    • Showcase your skills: Excel in your current role and look for opportunities to apply your quantitative skills, even if they seem limited. This will make you a more attractive candidate for a transfer.
    • Learn and contribute: Take every chance to learn about FX, rates, and commodities derivatives. Offer to assist with projects or analysis that might overlap with your desk's work.
  2. Making the Most Out of Your Time on the Repo Desk:

    • Understand the market: Deepen your understanding of the fixed income market. Repo trading is closely tied to the broader fixed income and monetary markets, offering a unique perspective on liquidity and financing.
    • Develop transferable skills: Focus on developing skills that are valuable across trading desks, such as risk management, market analysis, and quantitative analysis.
    • Initiate projects: If possible, initiate or participate in projects that involve quantitative analysis or touch on macroeconomic factors.
  3. Harnessing Skills and Experience from the Repo Desk:

    • Risk management: Repo trading will give you a solid foundation in managing counterparty risk and collateral, which is applicable across trading desks.
    • Market insight: You'll gain insights into the mechanics of the fixed income market, understanding the impact of monetary policy changes, which is valuable for trading macro products.
    • Quantitative analysis: Apply your quantitative skills to analyze market data, develop trading strategies, or improve operational efficiency on the repo desk. These skills are highly transferable.
  4. Pursuing Further Education:

    • While gaining a master's degree can enhance your theoretical knowledge and potentially open new doors, it's not always necessary for moving within trading desks. Practical experience, networking, and demonstrating your capabilities often carry more weight. However, if you're passionate about deepening your quantitative skills or specializing in a particular area of finance, further education could be beneficial.

Remember, the world of trading is dynamic, and being proactive, curious, and adaptable will serve you well on your journey. Keep an open mind, seize opportunities to learn and contribute, and don't hesitate to share your aspirations with your mentors and managers. Best of luck on your adventure in the repo trading world and beyond!

Sources: HF exits from macro vol desks?, https://www.wallstreetoasis.com/forum/trading/what-are-the-top-volatility-trading-desks-at-jpm-gs-and-what-differentiates-them?customgpt=1, Can banks prop trade FX and Rates product or not?, What fx/rates/fixed income desk is best for macro/rates hedge funds?, Q&A: ex-bank trader now running crypto hedge fund. questions?

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Your strategy can work something like this. Figure out whose books your financing, and try to start a conversation about how they can do a little better on financing here and there if they adjust their hedging or other holding details. Then try to learn more about their strategies and how that could interact with repo financing in more sophisticated ways, and then explore the possibility of a transfer from there.

 

To make a long answer short: You're in a great seat, I see plenty of folks to from repo to STIR/FX desks. Focus saving desks/traders money through hedging and automation to reduce costs and risks.

Lean on that quant background and it will be noticed.

 

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