Repo Trading - Why would one stay away?
I've seen several people say "don't do repo trading" or "stay away from repos." Why exactly would one want to stay away from Repo trading?
I've seen several people say "don't do repo trading" or "stay away from repos." Why exactly would one want to stay away from Repo trading?
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That's stupid. There's nothing wrong with repo trading. In fact, being on a funding desk is one of the safer places to be on the trading floor.
I think the reason people say that is: 1) Repo's are a pretty niche product without much mobility (except to other funding functions like Corporate Treasury, asset liability management, etc) 2) Funding desks are not oriented toward trading PnL but to locate cheap and secure funding strategies for firm inventory (FYI - this is not always true, some funding desks have dual mandates to both fund firm inventory and make markets in repo, hopefully profitably)
Right, but the funding/treasury area more generally is still one of the few places you can take prop risk these days (at least at certain banks).
This topic has been cover'd before.
The main reason is most repo guys are still stuck around from the 80s, when repo was cool and never let go of their posts. It is hard to find new blood in repo. There is lots of average/good repo traders very few great ones. You can make steady P&L in repo and continue a long due to lack of VAR. But on a exotics desk or commodities at times due to var/balance sheet you gotta go for the home runs. Repo guys do not do that.
Anyways the great repo traders, become global macro hedge fund dudes of the world. I have explained before how repo desks become exciting in Lehman days or whenever LBOs/M&A kicks up. Or the in the case of Iksil the man, when you banks commercial lending gets so large you have a SHIT ton of balance sheet to play with. Aka JPM's assets have grown a ton in the last 3 years per bloomberg article.
repo Trading? - Background or experience? (Originally Posted: 09/06/2012)
I was curious if anyone had any knowledge of what being a repo trader is like. Some potential questions I was curious about include:
Are these traders typically on a particular desk, or housed within treasuries? What is the background/experience of traders in this area?
Any info to share is greatly appreciated... Thanks!
//www.wallstreetoasis.com/forums/repo-trading-3
Thank you, Bobb!
Depends what bank you are in and the culture/politics of the repo desk. Some banks operate repo desks under Treasury control and maybe controlled by those who do not care about profit as such. While in other banks repo traders have dual responsibility of market making, provision of liquidity to the market, funding the firm inventory and risk management of the collateral liquidity. Make sure you stay on rates side though due to size and your ability to essentially play short term rates and Bills (some repo traders are also Bills traders or part of STIRT desk). Essentially check how the repo fits in the bank is important since you could end up being doing boring funding/covering short or making market and taking on positions in short term rates/RV bonds as if you are on the buy side. Best repo traders become macro traders on the buy side, seen it happen.
repo Trading - Working at the desk (Originally Posted: 10/07/2006)
I will be working on the repo (Repurchase Agreement) Trading desk at a top 5 bank next year, and I was wondering what is the general impression of Repo traders, what analyst bonuses are like, and what other trading desks they tend to go to after 2-3 years
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