Will Rates Sales and Rates Trading desks become Automated
Is a rate sales or rates trading job at a BB firm going to be around in 5-10 years?
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Yes
Would you mind elaborating on why you think this?
I work in rates sales and trading. Too many systems, too much risk, too many idiot clients, and too much human intervention. Could a rates desk eventually be fully automated? Maybe yeah. But it’ll be a while, decade plus. Not sure if you’ve ever worked at a bank but if you understood the politics of investing in tech/how shitty most banks are at execution of this tech then you wouldn’t even be asking this question.
Your a total idiot if you think equities trading isn’t going to be fully automated in ten years.
who even mentioned equities trading?
TLDR: Desks will become more automated, but they can't (and will never) be fully automated.
I spoke to someone about this at a BB who recently just left (his team was disbanded and featured on efinancialcareers) and I'm paraphrasing this so forgive me if there's any typos etc.
"The issue is that at the end of the day, a human still needs to check the trade and talk to the client in case they have any questions. If you leave an algorithm to automate the process, there'll be a definite chance that the algorithm will mess up and your desk will go under because you've left the entire control of the desk to a computer that can't understand outside perspectives or think ahead of time.
The desk will become more automated but it won't for the forseeable future be fully automated since you need a human to be on standby and intervene when the computer can't do its job properly. Computers are good at reading market sentiment but if there's a short squeeze or a huge event, an algorithm is the last thing you want in charge to automate trades without any conscious idea of what it's doing."
Make of that what you will. In summary, it can be done to an extent but politics (as Liam Gallagher above put it) will never let it take over the desk completely due to the risk profile that it generates.
Added a bit more text at the end from what I remember and a TLDR.
For juniors looking into the industry should they look elsewhere?
Elsewhere in terms of what? Desks, firms, career path?
Career path. I’m a college freshman interested in rates trading/buyside opportunities in the macro space (way more interesting than equities imo) but is it worth it to spend time recruiting/learning/developing a thesis when banks are reducing # of desks + comp and bonus, and buyside AUM is shrinking relative to other strategies, like l/s equities?
Love the space but I’m really trying to do due dilligence on the risk of entering a rates-focused career—looking for a 20 year outlook.
Honestly it’s great to hear you are putting a lot of thought into this…but you’re 18-19. Just because macro/rates/trading sounds interesting now doesn’t mean you’re actually going to like it, sure give it a try and do an internship but just understand you aren’t locking yourself into anything. People change careers all the time and you’re going to have so many opportunities in the next couple of years to try things out. Because of that and the fact that you’ve never actually worked (even tangentially) in any of the roles you are asking about I’m going to give you some more general advice. Finance is about catching waves. HF in early 2000s, VC/PE post GFC and zirp era, etc. But the thing they don’t tell you is that there are outliers. Outliers in terms of firms, groups, and individual performers. The best thing you can possibly be is an outlier in all 3 of these and catch a wave at the same time. But if you have a couple of them you’ll be fine. My boss is 40, he joined my firm/group a few years ago and yeah macro hit its stride post/mid pandemic. He’s going to make $1.5mm this year probably. No one knows what’s going to happen in 20yrs, so trying to plan your entire career plan around it is futile. All I can say is if they automate rates trading/sales and other similar roles then there are going to be a TON of other careers/jobs that are affected first…plus pay is actually going up not sure what you’re talking about, at least in my group.
I'm wondering this myself, alternatives to Trading that will survive AI
I don't think there's a need to look elsewhere (if you're asking about whether a seat on an S+T desk is one to pursue in the near future).
There will always be a need for a sales + trading desk given the human element that I discussed. The only thing I would say is that the skills required will evolve e.g. nowadays, you need reasonable programming skills to be able to model option prices and volatility surfaces etc. and in the future, you might need to familiarise yourself more with AI / ML models etc.
My argument is parallel with how excel came in the early 90s and became a mainstay of IB modelling. It hasn't changed the role much - it's only made it more efficient / less "paperwork"-esque i.e. more digital, if you understand what I mean.
It's still a decent role for people interested.
You could probably find this exact same question being asked 10 years ago.
don't most BBs auto-quote and auto-hedge anything under 50_000 DV01/PV01?
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