I've been invited to meet the Director of FX sales @ the firm's trading floor on Monday. Since its fairly late in the recruitment cycle I'm not exactly looking for an internship at the firm this summer, however I do hope to leverage this into a junior year internship by setting a good impression. My interactions with traders so far have been quite fruitful, particularly (former) BB prop guys and HF traders/ PMs where actual risk taking is prevalent. I must admit that I do have some unwarranted contempt towards folks in sales, perhaps due to the conflict in personality traits or because most of them call themselves 'traders' when they've never put their balls on the line, hence I'm struggling to come up with questions. Here's what I got so far:
1) His background and experiences: Ask him how he got to where he is today.
2) Impact of electronic FX on the need for FX market makers.
3) Impact of the Volker Rule on prop trading.
4) Worthwhile university courses.
5) Career advice.
I would greatly appreciate other suggestions as I'm not quite convinced that these questions make the person's time worthwhile.
If your knowledgeable of current economic conditions, than it couldn't hurt to discuss that.
ok being mean here.
1) Relevant: Good but distill it down to the 3 main things that he did that the others didn't.
2) Irrelevant, you can google that, in my mind. It's the same thing as evolution, adapt or die. Don't waste his time answering something you can find out yourself.
3) Again, google.
4). Nice but you can do better. Find 10 courses, ask him to rank them in order of relevancy, then ask if there's any you've missed. What courses did the most recent people he hired do?
5) Change this to: This is what I've done. This is what i want to do. Would you hire me if i achieved this this and this. If no, what do i need to demonstrate. If yes, then what else can you do to make it a stronger application.
6) Are my credentials and skillsets suited to other roles?
Ask him questions that only he can answer.
Ask him what he thinks the implications for the dollar are as the renminbi appreciates and becomes the worlds reserve currency.
Ask him wha he thinks the implications of a euro break up would be n terms of currencies- all of Europe goes back t indiv currencies or only a partial fail and the euro goes on.
I wouldn't... you're asking him questions like he's a trader.
I agree somewhat. Already mentioned this in chat ask him questions that would have to do with deal specific things not large macro movements. For instance if his bank was working on funding cross-border M&A how does his rolodex of customers help the trade desk, how does he interact with the trade desk etc...
Example I used was Glencore/Viterra. But there is a lot of situations on the deal side that sales with assist or work with trading. Sales will need to have their plan of attack setup.
Questions for fx derivs trading (Originally Posted: 12/28/2013)
Hi guys
I would like to have a few questions, would really appreciate your answers.
I am interested in fx options big time, and always DB's name come up as the best place for it. I would really want to go with NYC, but I am not sure if it's the right thing as far as trading "prospects" would go. My question would be, considering that the center of FX is London, that does working in their NYC office would disadvantage me in any way?
Which prop shops would hire ex fx options traders at BBs, if I decide to move? Although I have read that if you are killing it on the sellside, no need to move prop, or at least, does not really worth the risk. Would that be true?
HFs or prop shops would recruit more of them?
Having worked in both centres (first London and now NY), I'll answer this one with my first-hand experience. London, by far, has more flow. I'm pretty happy that I started there, as I learned a lot really quickly. I think most good FX traders probably will have spent some time in London. NY afternoons can be slow, and it can be harder to get things done that you want to do, but it has actually improved... I think there are more traders in NY who are running books/taking risk which makes things more liquid. Even that aside, it's a global book always, so if you want to do something but can't find liquidity, there's no harm with waiting for Asia/London to try and work on it.
The cool thing about NY in my opinion is that the customer relationships are much stronger. London, I'd say (and I'm generalizing here I know), is much more of a macro-execution center. The biggest HFs deal on the best prices, etc. I think in NY PMs tend to like to have more dialogue with sell-side traders and are more responsive to and reward idea generation. It works out well for everyone, I think, as I can go to a few guys I know best, say "Hey I think there's an opportunity here to do X, I've done it myself, what do you think" and if they like it they'll do it.
In terms of starting off, I'd say London is best to get experience, but I don't think you'd be disadvantaged being in NY... in fact given the smaller teams you might be able to get involved quicker.
As far as prop shops / HFs, there are a ton of ex-market makers out there doing anything from RV to Macro. Some of my good friends have switched to buy-side, it's quite common. It's not surprising to me really, coming up with a macro idea is relatively simple. Being able to efficiently and effectively implement a way to capitalise on it is where a lot of value is added.
+1 great post
Curious about a few things:
how do you see the FX options landscape changing going forward and how do you think your place in it as a market maker will evolve? (E.g. tighter spreads as the vanillas become increasingly commoditized? more focus on e-trading platforms and pricing by algos, etc.?)
How much do you like the product? Would you have pursued the FX options desk even if it were at the worst desk on the street, or is there a group of banks (e.g. DB, GS) outside of which you would have been better off pursuing another product that your bank might be better at?
How often (if at all) does your current desk take entry level hires that are not right out of college (e.g. Been on a different desk for a year or two but want to switch to your product)?
That skill set of efficiently implementing a macro idea via options - is that something you can only pick up as an FX options market maker? What proportion of the people you met/worked with were able to take that skill set and generate real alpha at a fund? It doesn't seem like the FX markets are a reliable source of alpha, or better put, there doesn't seem to be a reliable way of extracting value from the FX markets using a discretionary (I.e. Non-algo/high freq) approach - see FX concepts shuttering
Thanks! Any more feedback I welcome.
Could you have any input on DB specifically, like the culture or anything else? Did you like London or NY better, all in all?
Revsly, great post!
I assume that FX derivatives trading is something you have to join after college? It seems like there are very few BB trading spots for MBAs.
True. Many BBs don't hire at all from MBAs. In all fairness, an MBA won't teach you anything about trading so you are as valuable as an Analyst but more expensive and probably less willing to take shit, which is what you will do at the start of your career...
It's not impossible, but it would be quite rare in my experience. Lot's of derivative desks I know won't really look at MBAs for trading. Most come directly from college or Masters like Financial Engineering.
Revsly, is your view (differences bw NY and London, exit ops, etc.) only limited to FX options or does it apply to spot and forwards as well? Also, I've heard that at many banks FX spot traders mainly prop trade, so does this make them particularly good candidates for macro funds and other buy-side positions? Thanks
+1 question: How could sell-side traders prop-trade, when it is effectively banned by the Volcker rule?
You have to take on risk when you market make, so you can definitely "prop trade." It's hard to draw the line sometimes
The Volcker rule exempts currencies, commodities, and gov't bonds
It does not exempt Currency derivatives actually.
Probably spot or STIRT moreso than forwards. Yeah, it's a lot of prop trading, but you also have lots of information. Like anything, if you are really good I'm sure HFs will notice you.
Yea I know, but if you're a trader and say you're long a 3-month foreign interest rate, wouldn't that be similar to buying that foreign currency 3 months forward since it's that 3-month foreign rate that would contribute to the forward's price?
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