Do Salesman and Traders clash? and who wins?
Assuming that the Salesman is well versed in the product and markets, if a Salesman disagrees with a position that a Trader is trying to take, what exactly happens? It must be a tough spot for a salesman to be pitching an idea he doesn't even agree with to likely knowledgeable clients.
I was a salestrader for a while. I can't speak on how things are now but back then the trading desk was at the mercy of the buy side. Frankly BC of transparency, low rates and regulation, the buy side doesn't "need" the sell side the way they used to. I would think the salesmen have a tough time selling and the traders have a hard time making it on thin spreads.
The trader. Without a doubt.
At the end of the day, the trader is the one taking on the risk. If a salesperson is pitching a credit/stock to his client, he is relying on the trader's market to transact. In other words, nothing gets bought or sold without the traders permissions.
I am sure that tons of sales guys bad mouth their traders, but at the end of the day, the traders are the kings of the castle. If you spend 10 minutes on any desk, this will become abundantly obvious.
Also consider the economics: -If a sales person gets a client to buy/sell a position that the trader is asking for (AKA an Axe), you get a ton of sales points/commission
-If a sales person has a clients wanting to buy/sell a position that the trader isnt looking for, you are adding risk to the book, and thus your commission is much much lower.
Lol - yea the famous axes. Those don't happen very often........ Banks have pre-arranged ways on how commissions are split so you won't necessarily get less sales credit for a shitty position you put your trader in. You'll most likely get a shit price and won't trade, but not less sales credit.
To OP, as a salesman you couldn't care less what positions your trader is taking. It's his fucking problem and you won't fight him for what he might or might not put on his book. If a trader wants you to pitch a shitty trade to your clients you can do a half ass job at it, or not do it at all. It's your call, your clients.
Sales people rely on traders for prices and execution, traders rely on sales people for client flow. It's a two way relationship and except for the alpha bull shit traders like to put on the floor the reality is both roles are interdependent on each other - more so today as traders' balls have been cut off in terms of prop risk they can take.
On the sell-side it is absolutely not a hostile, zero sum relationship like you are describing it. (BillyRay05)
I never said its innately hostile- and every bank has their standard "One PNL" motto .
But I am saying that it certainly can be from time to time. If you haven't seen it happen, then you haven't been on the desk long enough (I started my career on a Sell Side high yield desk).
Salesmen would complain if they couldnt get a trade done with their 'Top tier' clients. And we as traders were always on edge, and would complain/yell at just about anything lol.
Salespeople are looking out for the client relationship (sometimes beyond their tenure at the firm) and traders are looking out for the PNL. When those two objectives come into conflict, you'll sometimes see people clash.
The short answer is if the client wants something, the client gets it. Doesn't matter if either the salesman or trader thinks the other party is f*cking over the client for fees, if the client has made up their mind, it gets done.
Lots of clients call their traders and Equity Research Analysts that they are tight with directly, effectively skipping the salesperson, so frankly their presence/opinion isn't always involved.
You are talking about equity cash sales - and yea except for organising road shows and kicking it with clients they don't get involved in the execution. However, clients now have to go via sales to limit access to the "free" research - a client just can't pick up the phone and call an equity analyst, unless said client pays the bank handsomely.
Client CANNOT call a trader and get stuff done directly with the trader - again some very rare exceptions apply, but traders don't have the time to deal with the knitty gritty that involves a trade. Sales/Traders are there for that.
And no - if the client wants something he does not get it. Unless, again exception apply if said client is the number 1 client for the desk etc... But this absolutely not true, sure he will get a price but the spread might be so wide he can park a bus into it and will trade away. Clients do NOT get what they want, traders are very much still in control. That is utter bull shit what you said, to be honest I see you work as an equity analyst and it's true that clients put a lot of pressure on you guys and it seems they can get away with what they want, but that's not the case when it comes to actually pulling the trigger on a trade.
Well yes my comment was in regards to paying clients (the majority), and sales traders (the majority). Trying to paint a picture of normal business practices for Chimesanfran here, not the exception to the rule.
And when I said the client gets what the client wants, I never implied they get to pick the price they enter a position at... that's just illogical. If the client wants to enter a position that a trader suggests to them, which the salesperson disagrees with (or vice versa - Chimesanfran's original question), there is no arguing that takes place... if the desk has a counterparty, the trade goes through. Nobody is suggesting the client can force a liability trade on the brokerage's P&L - that would be crazy.
I think you're taking my response out of context to the original question.
So don't start pointing fingers implying that a client can pressure a sell-side analyst to "get away with what they want" because my answer upset you. Maybe your investment bank doesn't operate with any integrity, but that doesn't mean the rest of the street functions that way.
Coming from a buyside statarb firm which generates a lot of flow, a great deal of the value we derive from banks actually comes from their ER and QR departments.
Our PMs generally don't talk with traders or salespeople very much, but everything on the finance side sort of stops for a site visit from an excellent ER or QR-- from our traders to quants to PMs to portfolio engineers. Also to be sure, while there are some excellent sellside QRs and researchers who know it and make sure everyone else knows it, there does seem to generally be an inverse correlation between talk and skill; competence and swagger.
"Work hard in silence... let success make the noise."
(Speaking of that I probably need to get back to work.)
Voluptatem accusantium laudantium hic sit error neque labore. Quod quam ipsum rerum doloribus qui libero. Sed voluptates corrupti quia consectetur suscipit ut non. Excepturi reiciendis atque laboriosam consequatur numquam blanditiis voluptates occaecati. Adipisci eum deserunt veritatis dolores.
Non vitae mollitia autem voluptatem ad omnis. Aut enim sed eligendi cumque adipisci. Tempora numquam iure aut officia. Veniam sed asperiores est cum quis. Enim amet occaecati officia repellat quo eaque qui.
Officiis aliquid dolor consequatur et rem eveniet vero. Totam illo inventore ut ea tempore et error neque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...