Differences between FX and Rates

cirucci's picture
Rank: Monkey | banana points 33

What are generally some of the differences in trading across the product spectrum of FX and Rates?

How do the two cash markets (spot and bills[?]) compare in terms of electronification?

What tends to be more complex, short end rates or STIR (FX forwards)?

How do the skillsets across FX options and Rate options differ?

And within the same product, how different would the short end be from the belly or long end? Or how different would STIR be from longer dated cross currency basis?

What about G10 vs EM across both products?

Do they two products tend to draw different types of people?

Controlling for product complexity (spot vs cash, linear derivs vs linear derivs, and options v options), do traders from one product tend to outperform those from the other in terms of careers?

Which is more favored under the current regulatory environment?

Just some questions I've had in the back of my head. Feel free to answer some or all. I have an opinion on a few of the questions too and would love to discuss.

Comments (4)

Oct 29, 2016


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Oct 31, 2016

1) Maybe you mean spot FX and cash bonds. "Electronification" is definitely more prevalent in FX, although bonds etc are getting there.
2) STIRs are short end rates. In general, in the short end, the line between rates and FX gets increasing blurry, so I'd say they're equally complex.
3) Rates options can get a LOT more esoteric and technical, IMHO. On the other hand, there's a lot more product variety in FX.
4) It depends on how the desk treats different parts of the curve. In general, the differences would depend on the strategies used.
5) Depends.
6) Not really, IMHO.
7) Not that I am aware of.
8) Probably FX, although it's very hard to generalize.

    • 1
Oct 31, 2016

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