2/24/09

Commodity Trading comes up a lot on this forum but Sales doesn't. Does anyone know anything about the lifestyle and work that someone in Commodity Sales experiences?

Comments (28)

Best Response
2/24/09

From my experience commodities sales is very different from other sales desks on the trading floor. First, I'd say the experience is not really true "sales", hence why the sales role in commodities is often referred to as "marketing" or "origination".

At least at the big commodities desks, the sales role relies less on the flow trading of standardized products (e.g. nat gas swaps or options) and more on providing customized hedging solutions for either corporate clients (i.e. hedging) or investor clients. Sometimes the "customization" is simply changing the basic terms of a swap, whereas other times it is structuring new products from scratch.

In addition, in the commodities sales and structuring roles there is often a lot of crossover between what is traditionally viewed as S&T, and what usually falls under IBD or PE. And example would be you may have a client who is a large PE firm. They are looking to purchase a physical commodity asset, like a power plant. The commodities team will work with other areas within the bank to value the plant, assist with financing, if needed, and then to design a custom long-term hedge. Because of the commodities expertise needed to do so, the salesperson or structurer on the commodities desk is often involved in all areas of the deal, even if their main focus is on designing the hedge.

I know that's just one example, but the general idea is that commodities sales is much less of a market-drive role in many cases, so you are often attending meetings, visiting clients, etc. versus being chained to your desk all day. That said, hours are the worst on the trading floor. Traders tend to have the shortest hours on the desk, with the exception of power traders who often work long hours. Then the sales people, who typically work anywhere from 7am-7pm at the lightest, to 7am-midnight (especially if you're working in power sales). Then of course the structurers have the longest hours. That said, on some of the biggest desks sales and structuring have merged in some areas, so the dividing line is not as clear.

Most of this applies to the corporate side, which is the bulk of commodities. You can also focus entirely on the investor side, in which case your clients may be primarily hedge funds. In that case you usually have more of a "traditional" S&T workload. Hours are usually a little lighter, and the basic flow work is a little less quant because you're trading more standard stuff. That said, they can also get access to a lot of cool structured stuff, but the product will be different. Say a long-term, principal-protected option on a basket of commodities, quanto'd into Swedish Kronor, or something like that--that would be on the investor side. Those can in turn be marketed to more than one client, in contrast to a custom hedge that's specifically designed for one client with an actual commodities exposure, and cannot be sold to anyone else. Needless to say, if you work with the latter your hours will be longer.

Off the top of my head rambling, but I hope that helps....needless to say, when I showed up on a commodities sales desk for the first time I was shocked by how different it was from every other desk I saw during summer and full-time rotations....

Financial Modeling

2/26/09

The structurers i've seen usually double up as sales to bigger clients. There much few specialist sales, most generalist sales.

12/27/09

^^ Do you mean that now most sales in commodities is generalist, e.g. across all different types (oil, metals, ags, etc.)?

12/27/09
ambione:

^^ Do you mean that now most sales in commodities is generalist, e.g. across all different types (oil, metals, ags, etc.)?

not at all

12/27/09

Second Monty.

I think the above poster may have meant "generalist" in the sense of working on multiple facets for each commodity, such as origination vs. structuring....maybe he/she will comment.

Overall, commodity sales are highly specialized, and frequently unrelated. For example, if you're working in origination for power, you have to at least have a working knowledge (and probably even more, in all actuality) about transmission, power flows/congestion, pricing, tolling agreements, etc. In oil, it may be better to know about ocean transport costs.

12/27/09

if you want trading/buyside, why not try to get into trading/research at your bb?

you have a lot of networks im sure.

12/27/09

I was mostly asking about the possibility/likelihood of such a change (either within my firm or another)

12/27/09

Just giving this a quick bump to see if I can get some more opinions.

12/27/09

Very few. I used to be in commodities sales and got laid off so I have a good sense of how employers view it - not great. I'm lucky to have been able to fall back on my academics and get a research role, although I have to start all over from the bottom. Almost everyone I used to work with is still in sales. Many others who got laid off with me are either still out of work or have had to move abroad to find another sales job. Basically the choices are 1) sales in bank 2) sales at commodity trading company 3) become a broker.

The HF sales guys convinced themselves that they could get hired by a client but I never saw that happen. What would a sales guy do at a HF anyway - investor relations? If a commodities fund wants an analyst they'll take an ex-trader or researcher who can actually build models. I've never met or heard of a HF analyst who came from sales.

If I were you I'd make sure to pick up as much analytical and quantitative work you can to make yourself more employable. Get close to the traders/structurers/research team and it might be possible to transition internally. But if you stay in sales for more than 2-3 years you'll need to do an MBA and start again.

Hope you don't think that's harsh but I wish someone had told me this before I got laid off, I would have done things very differently.

12/27/09
fp175:

Very few. I used to be in commodities sales and got laid off so I have a good sense of how employers view it - not great. I'm lucky to have been able to fall back on my academics and get a research role, although I have to start all over from the bottom. Almost everyone I used to work with is still in sales. Many others who got laid off with me are either still out of work or have had to move abroad to find another sales job. Basically the choices are 1) sales in bank 2) sales at commodity trading company 3) become a broker.

The HF sales guys convinced themselves that they could get hired by a client but I never saw that happen. What would a sales guy do at a HF anyway - investor relations? If a commodities fund wants an analyst they'll take an ex-trader or researcher who can actually build models. I've never met or heard of a HF analyst who came from sales.

If I were you I'd make sure to pick up as much analytical and quantitative work you can to make yourself more employable. Get close to the traders/structurers/research team and it might be possible to transition internally. But if you stay in sales for more than 2-3 years you'll need to do an MBA and start again.

Hope you don't think that's harsh but I wish someone had told me this before I got laid off, I would have done things very differently.

That is a good fucking post. Bravo.

12/27/09

I think your exit opps would actually be better if you were on the corporate side. From my experience, the HF sales guys tended to do more flow, whereas the corporate side offered more opportunities for bigger, chunkier deals, which in turn required the sales people to do structuring, and thus build out their modeling and quant skills.

Just a generalization, though, as I've seen corporate sales guys who don't model and HF sales guys originating some very cool exotic stuff. But in general I think the HF side tends to deal with simpler products, and clients who are more focused on execution than the structuring of customized hedging solutions.

I'm pointing this out because I think commodities sales offers you the opportunity to be the most quant sales team on the trading floor, and just as quant as trading and structuring. In addition, much of commodities sales these days is resembling more IBD and PE than traditional S&T. Most of the top sales desks now have internal PE funds and are buying physical assets. That opens up an entirely new exit opportunity.

Switching from sales to trading isn't common, so your best bet is to do it at your current shop. Switching to trading at a new firm is very unlikely--best bet is to do it not just in your current firm, but on your current desk. As an example, I've known many structurers that switched to either sales or trading, but did so within their own desk.

I also echo what the other posters said, in that as much as you hear about sales people going to HF, I've rarely seen it happen. My impression is that it's similar to guys in IBD going into PE. Either do it very young (i.e. analyst, or associate if you joined from b-school), or you'll have to wait until you're very senior. Doesn't seem to me that a lot of VPs or Directors jump ship successfully.

Just some thoughts from my experience, but please correct me if I'm off-base at all.....

12/27/09

Dont' do sales bro.

12/27/09
megafundguy:

Dont' do sales bro.

Considering retail commodities sales at MF Global in Chicago. Good or Bad idea?

Also - anybody know where I can get a Series 3 study guide for less than $100? .. or like, closer to free?

12/27/09

Sales guys can always go to id brokers
know those guys can make serious dough--and def. not as smart as traders

IVY for Life

12/27/09

What are the opportunities for Canadian ID brokers like?

12/27/09

there are plenty of people who worked in institutional sales and moved over to hedge funds....

12/27/09

This is a relevent post for me as I have just moved into a commodities sales role in the past 4 months. So far from what I understand (from the above posts is):

1) Sales to trading --> Very tough, highly uncommon, in order to do it, stay at your old firm and on your own desk and then MAYBE you can switch

2) Sales exit opps --> Not many, broking, commodities house sales team or sales in a bank..

3) Forget HF --> not a likely possibility

So all in all structuring is the best route,since it opens the door for both trading and sales down the road.

Please correct me if I am wrong.

To add to the above discussion, does anyone know first hand what the opps are in HK, Singapore, far east? I am hearing a lot of noise about good opportunties is it true or is it just noise?

Appreciate the comments back.

  • Only time will tell....
12/27/09

Hearing good things about opps in Singapore for precious metals sales and trading. Some for base, focusing on China etc, but not as many.

Don't know many guys on the energy desks in Asia so can't really comment.

Financial Modeling

12/27/09

anyone? im interested to know too...

12/27/09

Interested as well. Please share.

  • Only time will tell....
12/27/09

What specifically do you want to know?

Hours are similar to Equity sales, start a bit earlier, prob leave a bit earlier. Varies by location (west vs east coast), but in New York, most of our sales guys come in at 8, and are out by 5.

Typical sales stuff, take clients out in the evenings, golf a fair bit. Need to be pretty up to speed on options and derivatives as the clients are generally sophisticated (hedge funds or O&G firms).

If you're with the right firm, comp is comparable to that of a mid level trader (not prop trading firm, but at a BB)

Overall, its a good gig.

12/27/09

I just joined a metals sales desk and doing a lot of learning by my self. Can you provide some tips/insight as to what I should be focusing on, and what will help me succeed in the job.

I know my way around options and derivatives, and feel like I have a decent handle on how macro events effect the market.

But any help is welcome.

  • Only time will tell....
12/27/09

If you are in commodity sales, I'm assuming you are only working with paper right?

12/27/09

That's so awesome... I'm trying to leave my current BB IBD position to transition into commodity sales. Looking at other BBs as well as mid-tier shops. Any ideas?

12/27/09
12/27/09
  • Only time will tell....
Add a Comment