S&T: How is it different than market making?

S&T: How is it different than market making?


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Comments (5)

  • Intern in HF - EquityHedge
May 9, 2022 - 6:40pm

Market making is just one aspect of the trading side. There's agency trading, flow trading, and of course hedging risk alongside the various functions of sales.

  • Analyst 1 in IB - Gen
May 11, 2022 - 6:03am

It is.. by and large, market making? This is kind of a non-question

Most Helpful
May 11, 2022 - 12:17pm
analystshmeeb, what's your opinion? Comment below:

S&T is literally market making. It shocks me how little is described about the S&T process.

Customer a comes in and says make me a market on a 20 year SOFR swap. Sales asks trading for the price. Trading gives sales the two way price.

Sales tries to read the customer and put markup on the correct side. Client deals or doesnt deal. Trading takes the opposite position as the client and now either has to get rid of his position in the broker market, hedge it completly, or find another custy on the opposite side. That process right there is called market making.

But... Guess what. Thats not all of tradings job. Trading can literally just buy whatever they want in the market and hold it for a day and call it pre-hedging. Its a hedgefund with less risk carried overnight and only one product + a risk manger making you not take too crazy of a position. Without taking directional risk trading desks will make no PNL

May 14, 2022 - 1:56pm
nontarget kid, what's your opinion? Comment below:

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