Desks that interact with central bank
Hi, I was curious if you guys know which trading desks do repos/swaps/funding with the central bank? Thanks!
Hi, I was curious if you guys know which trading desks do repos/swaps/funding with the central bank? Thanks!
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govt bond trading desks and FX are the big counterparties to central banks...more so than derivative desks like swaps and vol
Thanks for the reply. Do you know who it is that determines the level of excess reserves to hold at the central bank? Ie: MDs of these desks, treasury, someone higher up, or does it just naturally happen depending on other opportunities?
excess reserves is not a trading desk function...maybe treasury ("treasury" is different from the desk that trades "US treasuries")...probably the CFO office
I know that there are central banks sales and solutions desks within rates S&T. I'm piecing together the different desks by talking to a lot of different people. There is no central book/repository which is what makes this type of networking actually exciting. Excess reserves decisions would be within Treasury I believe but reserves requirements, policies etc vary a ton based on first whether its a US bank or a foreign bank, and then if you're talking about an foreign bank in the US, what type of subsidiary is setup here.
So there are desks within Treasury (not S&T) that are really cool like a balance sheet management PM who invests and positions excess liquid rates/fixed income assets. Even if the assets are primarily in USD, you can also try to optimize the portfolio to build PnL with cross currency swaps for example. You also have people managing bank counterparty risk by trading credit derivatives. You have repo and money market (this can include trading fx/stir products) desks that handle the day to day funding of the bank's balance sheet. Even though roles like that are within Treasury, I know for a fact that they are rotations in certain bank's intern/graduate S&T programs. Treasury division ultimately decides how much balance sheet the businesses like S&T get which makes it very powerful in a sense even though it's not a traditional PnL business of the bank. It's not supposed be a traditional PnL business of the bank because look at what happened within JP Morgan's Chief Investment Office a number of years ago ("London whale"). That was within the Treasury division. There's an important but blurry line between management and optimization of inherent risk within a balance sheet and taking speculative proprietary positions.
That’s interesting, appreciate the response
Tha'ts very interesting. THanks for sharing.
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