Hello all-
My search yielded pretty decent results but I wanted to get a bit more granular on the different desks within FX S&T.
FWIW, I'm a quantitatively-capable, but qualitatively-oriented person. I'm love FX markets and I'm currently reading the Weithers book.
I'm interested in getting onto the buy-side at some point (some sort of junior PM at a larger HF is the medium-term goal), so I'd like to know what FX desks stand out in terms of building a skill-set valuable to hedge funds, and why. I'd like to learn a little about both sales and trading roles. Thanks -
I guess we're on the same page...
Cool. Hopefully Revsly or FX Trader will see this (I already stalked their posts, they're both really knowledgeable about such things)
Well, just to clarify, do you want to do sales or trading, both bring vastly different skillsets, with the obvious choice being trading related to hedge funds, however when you go through an analyst rotation program the choice is not entirely yours either.
That said if for whatever reason you are placed in sales, working on an institutional desk is probably a better choice than covering corporates. You at least make contacts at the different hedge funds, but i have no experience in institutional sales so im not sure if you get much contact with the PMs, more likely you deal with the execution guys on the other line so im not sure how good of a networking contact that would be. But youll get to work with alot of different products of varying levels of complexity. Also a big difference between the EM and G7 fx worlds, the last place i was at split them into two different units. Generally in EM you cover rates, fx and sometimes even commodities.
From what i understand trading spot fx is somewhat of a career dead end as the veteran traders rarely move out of their seats so youll be stuck trading a tiny skandie flow book and making markets in small size. Forward trading is better imo, more of a complex product as you have to deal with rate markets in two currencies. Hedge funds tend to trade big size in fx through fx swaps as they are spot neutral and therefore dont move the market. Ideally you probably want an fx options desk, where you have to understand the spot mechanics, rate mechanics, vol etc.
Thanks for all the input everyone.
So FX is loosely broken out in a number of ways:
Institutional (covering HF etc for investments/speculation) vs. Corporate (mostly for hedging--less exciting) G10 vs. EM (Although EM is itself broken out differently depending on the bank) Spot (which is usually G10) vs. Forward vs. Derivatives, although certain EM groups can cover many of these product groups and of course - Sales, Trading, Strat
I have been told by a number of people that I'd do well in sales, so as long as I can develop investment acumen (again with HF in mind) in sales, I would love to stick with it - is it out of the ordinary for a junior salesperson to move over to the buyside? Someone commented that a lot of PMs are former strats, so I'm definitely going to keep that in mind as well.
I'm particularly interested in EM. Are there institutional salespeople who cover EM forwards/vanilla options? Are all salespeople covering options quant-heavy, or is that generally the case only on exotics desks?
Thanks again, this thread is highly informative--
^^Parts of that are correct, other parts not so much.
There are only three (maybe 4) desks in FX. The big ones are Spot, Forwards, Options. There is also the electronic desk--but that is more dealing with the orders that come from the banks eplatform and is not a real trading desk. Spot and Options guys get a decent amount of flow, but the forward guys I know have the least amount of flow and are the most prop of anyone.
Options is obviously the most technical, and would provide a decent skill set for other products. Options is what you would expect, mostly CS majors and more quantitative guys. FX spot is also fine for a placement--it's much more fast paced, but the exit ops to HF would be just as good as anyone else's chances.
One of the other main differentiators between FX Desks is their focus, which has traditionally been G10 vs. EM, where you can dissect EM even further (e.g. Asian vs. EMEA). I currently work on a G10 desk but will be making the transition over to EM in near-term according to my boss.
I agree with the point about preferring an Options Desk (definitely when scouting for a full-time spot). A lot of the global macro funds love using options because of the asymmetric risk profiles they can employ, as opposed to straight directional risk with spot and forwards.
Food for Thought: If you're more qualitative and your end goal is to work on a buy-side global macro desk as a PM, you may want to give a look at becoming a strategist. That's basically someone whose sole purpose is to formulate trade ideas. At the global marco fund I used to work at, virtually all the PMs used to be strategists. Major "drawback" with being a strat is that you're more of a economist/research person than anything. I'm not saying this is the best or only way to land a PM job. Just some food for thought.
That part about EM is correct. When people talk about spot it usually means G10. FX had my bank has maybe 3-4 traders who trade non G-10 spot, but then we have an Emerging Markets FX team which is in the Emerging Markets product group (completely separate from FX) which covers the vast majority of our emerging markets FX--including options, forwards.
Sales is not separated by desk like traders are. Sales are somewhat separated by client (ie most of their clients are regional banks, but they can have a HF also). Sales covers all the different products.
So they're only separated by EM or G10 then?
ok, let me clarify because I did type that last comment quickly. FX has sales which usually cover a particualr client base (as do all products). Sometimes a sales guy for whatever reason will have a client that is outside his usual range. A sales person deal with all products...so there is a corporate sales guy that covers Cisco...Cisco will use options to hedge FX risk, and spot or swaps if they need a certain currency to complete a transaction--they will use the same sales guy.
EM is a completely different product group. Go to Gekko's Guidance part 2, scroll to the bottom and look at the Emerging Markets Trading link I posted to get a bette sense of of EM. An EM sales guy would cover lots of different products and not just EM FX.
EDIT: Sorry, stepped away from the computer for a bit and didn't get a chance to see Gekko's reply above. But here's my write-up anyway.
Sales Desks tend to only be separated according to client type (e.g. Institutional, Corporate or Retail).
Furthermore, Institutional and Corporate each has their own caveats (depending on the bank again). Institutional coverage may be divided according to two general types: - Real Money (i.e. Pension Funds, Mutual Funds, Insurance FIrms etc.) - Leveraged (i.e. Hedge Funds)
Corporates may be divided between Large Cap and Mid-Cap companies. Within BAML's FX franchise, I've heard from a very reliable source that BAML's even divided their corporate FX coverage into industry groups, similar to IB. However, I've heard that little experiment went south and the guy who came up with that idea got fired.
For a while, I know BNP's equity derivatives group had a sub-group, who focused on long-only institutional accounts. Not sure if this still holds today since my buddy, who used to be in the group got laid off in addition to the senior salesperson in that group.
What would you like to know? I work on an FX Options desk. My bank was mostly product specific for derivatives offers (ie I received Options in FX & Swaps/Swaptions in Rates). Don't know how other firms do it, but I'm sure you pretty much know where you'd be.
It really does depend. I know a guy who knows that his FX offer is for FX options, but another guy who just has a general FX offer. There are other groups at the first bank (the guy who knows about the FX options) who just has general offers for credit...so it depends by group, bank, and possibly year in terms of how specific the offer is....at the end of the day, it's all about which desk needs people.
why did you choose FX over Rates?
"If I was creating the perfect macro PM I would start him on the money market desk at a sell-side bond dealership..i think interest rates are the building blocks for all the markets and they also in my opinion require the most specialized knowledge. Once you really understand the mechanics of the rates markets it makes everything else much easier. Unfortunately this type of job no longer has any "prestige" so its a rare path nowadays.
i mean sell-side sales not inter-dealer"
personally i think with times like this you should try and get every and any markets related job and be happy like crazy if you can get either S or T.
//www.wallstreetoasis.com/forums/emerging-markets-trading-questions
There is the link Gekko is referring to, and it really is a fantastic thread.
Revsly, thanks for the input. Here is my situation - I'm a quantitatively-capable, but qualitatively-oriented person. I want to gain the best possible skill-set that I could take to a hedge fund as a junior PM after a few years. I'm interested in FX and EM, although I realize that EM can be a totally separate group where you cover a number of different products or regions.
So with that in mind, 1.) Are most people on the FX options desk quant-heavy? 2.) Do the salespeople gain a substantive knowledge in investing that is attractive to the buy-side, or is it more like equity sales where you're essentially a relationship manager? 3.) What is the interaction like with your strategists? Are strategists focused on particular products, or particular regions, or both? Would this be a better option than a salesperson if I want to move to the buy-side after a few years? Any info you think is relevant regarding strategists is appreciated as well.
Thanks!
1) Everyone is good with numbers, but not everyone is quant-heavy. The less quant people are normally more on the vanillas side, but even then they still have to understand higher-order risks. 2) In general, I wouldn't say so. I guess its all within your grasp if you want to, but most salespeople have a very tangential understanding of the products. Structuring and Trading are a better transition, but that said I know there are sales people who've made the jump and I don't want to be unfair, there are salespeople who do come up with ideas, etc so if within sales, those people comfortable with RV plays, identifying best strategies would be the most likely to transition to buy-side. 3) We work with strategists mostly in that they'll ask for our advice and we'll ask for theirs if we are thinking of pitching a particular trade, such that they can come up with a good back-story. I don't know what to tell you, there are many paths, its all about what you make of it.
If anyone has an in with an FX desk give me a shout. I've been trying to break onto a desk using my background in spot FX and the recent MBA I obtained. Yet for some reason I can't seem to get through. Help appreciated!!!
Bump
Thanks Revsly, SB.
Why, though, if you're interested in being in a risk-taking position, are you not focusing on trading?
Sint ea ea libero sit. Quo quia tempora repellendus vitae.
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...
Accusamus inventore accusantium culpa corporis qui. Est explicabo praesentium necessitatibus. Velit maiores tempore perferendis cum. Omnis et dicta distinctio. Modi quis dolorem dolores et. Aut et dolorem minus aut.
Sed nam vel accusantium accusantium temporibus quidem quaerat. Autem commodi nobis asperiores est repudiandae non. Ipsa harum porro perspiciatis. Sit ut minus veritatis illo. Adipisci quas enim non doloribus dolores.
Voluptatem vel dolor tempora mollitia fuga assumenda. In voluptatem consectetur fugiat ipsum dolorem aspernatur modi. Et sed omnis quaerat aut nihil ullam. Aut molestiae sit blanditiis distinctio atque ut eaque.