Sales and Trading VS. Capital Markets

I've been doing a lot of research online and on the boards, but I can't seem to figure out the difference between S&T and working in the Capital Markets department of a firm. I know you work on trading desks for both.Can someone please explain the difference?

Capital Markets Group

Please see below for a description of the function of a capital markets groups from Investopedia.

A division within a larger company that uses its expertise in financial markets to provide financial services to specific types of clients. Capital markets groups can help companies meet a wide variety of financial goals such as raising equity of issuing debt. A capital markets group may provide investment management services, lending services, equity sales and trading, research, consulting services or any number of other types of financial services.

Capital markets groups raise capital for clients in primarily two ways, debt and equity. The following is an example of the type of work a junior equity capital markets banker might do.

You keep track of all equity deals (both IPOs and follow-on offerings) globally, and you compile this info for the bankers to use in their pitchbooks. Oftentimes, you are also responsible for putting together league tables (ranking the banks and essentially trying to find ways to make your bank look like it's #1).
ECM also acts as a conduit for pricing the issue (i.e. they decide in collaboration with the bankers, clients and equity sales what the price range will be which gets put in the prospectus, and then when the deal is ready to go, what the actual price per share will be - which ultimately is a compromise between what the salespeople think they can sell it for, and what the client wants).

ECM also helps put together the term sheet for the deal (price range, number of shares, greenshoe option, etc.).

Sales and Trading

Sales: Pitch the firm's ideas to clients to sell securities and build relationships with clients.
Trading: Trade securities, typically in two ways (there are other means of trading, see "Different Kinds of Trading" for more on that): trading for the client or trading with the firm's capital (called agency trading and prop trading, respectively).

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Comments (39)

Best Response
Jul 2, 2009 - 9:09am

You don't work on trading desks for cap mkts - though they do call it a 'desk'.

At face value, capital markets' function is to monitor current issuances and see how they are received by the market - the goal is to work with IBD to fix terms on an issue that will be accepted well, and then to work with sales to develop a distribution plan. From a jr level, you'll be doing lots and lots of comps.

To be frank, I think capital markets roles are a joke because you learn neither trading nor hard corp fin skills (modeling). Your exit opportunities will be limited - probably won't be able to move to a HF, definitely not a PE shop. It's better than doing nothing in these times, but if you have an alternative, I'd go with it....

If you do a search on WSO, you'll see I've voiced this opinion several times.

  • 3
Jul 2, 2009 - 6:21pm

It's closer to IBD than S&T from what I've seen. Essentially what they are doing is origination... in the most basic sense you could think of it as a Primary Market vs. Secondary Market analogy. Primary Market would be capital markets, for example, pricing a bond issue for a company. Secondary Market would be S&T, making markets in the bonds after they have been issued. It's a little more complex than that, and lots of products in S&T that don't have capital markets counterparts, but I think its a pretty good way to think about the relationship in general terms.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

  • 1
Nov 11, 2009 - 10:57pm

I've been trying to figure out the difference between Cap Markets and IBD and I just can't do it. Isn't IBD's main function-besides M&A advisory-capital raising through IPOs and debt offerings? Are these guys just a middle man between IBD and S&T or something? I don't get it.

Nov 11, 2009 - 11:18pm

Capital Markets vs. Sales and Trading (Originally Posted: 10/14/2006)

What is the difference between these two groups? Specifically, how are the jobs different, the hours, etc.

Is syndicated finance usually part of S&T or cap markets?

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Nov 11, 2009 - 11:21pm

At some banks they have a capital markets or "global markets" umbrella, and within that you've got s&t on the public side and structuring/origination on the other side. It's all semantics, though, and every bank seems to have a different org structure.

Nov 11, 2009 - 11:22pm

Capital Markets vs. S&T (Originally Posted: 02/16/2008)

I know DCM/ECM is an intermediary role between banking and trading. Sit on trading floor. semi-faced paced environment. I'm trying to decide what's better for me. I've been on trading floors and like the environment, I'm just not sure if you have to be stone cold regarding your ability to take risk to be a good trader. Can people more familiar with the differences list the them, including salary, bonus, work hours, type of work, type of personality best for each...

Nov 11, 2009 - 11:23pm

Especially about what you learn. and what you can do afterwards. trading?

in my bank it is in corporate finance and they are the least favorite picks. everyone does coverage or manda, why? I know that you dont get the modelling and general corpfin knowledge an dyou dont go to PE.

do you stay in the bank? do they kick you out.

Nov 11, 2009 - 11:24pm

Easier to Break Into: S+T or Capital Markets (Originally Posted: 11/01/2011)

Hey guys, so I am interested in both of these (but not really straight investment banking) and banks are seemingly adding new specific applications for capital markets. I was wondering if it is was easier to get into capital markets these days than sales and trading. Thanks.

Nov 11, 2009 - 11:26pm

ok why do you say cm? how would you recommend breaking into cm?

Nov 11, 2009 - 11:30pm
ok why do you say cm? how would you recommend breaking into cm?

CM can be thought of as a hybrid role between IBD and S&T; they're markets facing roles, but still largely deal driven. Breaking in is similar to breaking into IBD, network and maybe show a little more interest in the markets than the average IBD applicant. Within CM, the groups really vary in terms of their roles; some are more sales-like positions like in syndications/priv placements, others are more math-y, like convertibles.

Nov 11, 2009 - 11:29pm
Because, Capital Markets doesn't make money. They do research.

In the end, the farther you are away from ACTUALLY generating $$$ - the less prestigious / less competitive.

Do you know what capital markets groups are? DCM/ECM groups like origination, syndication, private placements, and convertibles groups all definitely generate revenue...

That being said, breaking into CM is probably still easier than S&T, but because S&T groups are reducing headcount, while CM groups aren't necessarily doing so; there will always be debt issuances to work on, and also equity issuances (though more cyclical generally).

Nov 11, 2009 - 11:31pm

MS Capital Markets vs S&T SA? (Originally Posted: 02/04/2009)

I'm entirely confused. I go to an ivy and applied for S&T (Equity and Fixed Income) and initially I thought I didn't get it, but then I got a call for an interview from Capital Markets' Fixed Income desk and got invited to final rounds, but it's not the "Fixed Income Division," it seems like a part of the Global Wealth Management Division...but I'm working on the Fixed Income desk?

Can someone please explain the difference between Capital Markets Fixed Income and S&T Fixed Income or is there no difference?


Nov 11, 2009 - 11:32pm

capital markets is more tied to IBD - you research current deals in the market to help them draw up terms on a deal that will be paletable to investors.

I've stated on other posts and I'll state it again - I'm not keen on these gigs. You don't develop a good skillset and at a jr level, it's just a lot of data-dumping. You do IBD to learn to evaluate investments and model, and you do S&T to be active in the markets....cap markets does neither. you get a good perspective on the deal, but you're not really doing the heavy lifting where you can learn.

  • 2
Nov 11, 2009 - 11:33pm

s&t vs. CM for SA (Originally Posted: 01/11/2008)

So I go to a target school with a high GPA, solid experience, and connections and so am not worried about getting interviews.  However, the deadline for my school is this Sunday for all banks and I'm torn b/w S&T and CM.  Can anyone tell me the differences b/w the two in terms of day-to-day responsiblity and hours, etc.  thanks a lot. sorry for the urgency.

  • 1
Nov 11, 2009 - 11:34pm

whats cm, captial markets?


"its the running joke now, we now have fair trade with china so they send us poisoned sea food and we send them fraudulent securities."

Nov 11, 2009 - 11:35pm

If CM = capital markets, at most firms, Capital Markets <em>includes</em> the sales and trading operation.

- Capt K - "Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. If you want to make ambitious people waste their time on errands, bait the hook with prestige." - Paul Graham
Nov 11, 2009 - 11:38pm

thanks physicx, but can you shed any insight as to the daily differences b/w the two?   Phab, CM is a hybrid b/w IBD and S&T and with an emphasis on debt origination rather than sales.

Nov 11, 2009 - 11:39pm

MS for example has Global Capital Markets and Sales & Trading where GCM is the hybrid b/ IBD & S&T. Basically they help bankers with IPOs and make sure the stock is going to do well once it hits the capital market. There are also structuring roles in the group. I don't think the division is as solid as IBD or S&T, but less hours than IBD for sure.

Nov 11, 2009 - 11:41pm

Which interests you more? What are your career goals (aka do you want to stay in S&T or move to something else?) No one can answer this for you really.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

Nov 11, 2009 - 11:42pm

I think is has a lot to do with which bank you are referring to. I would do as much research as possible on the bank's capital markets group. Go to Bloomberg (just type in 'league table' in the top search bar and you'll see it pop up) and look up the equity and equity-linked league tables to see where they are positioned compared to others. If it were my choice, I would do capital markets.

Nov 11, 2009 - 11:45pm

you go to Duke that explains everything.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
Nov 11, 2009 - 11:49pm
You get the best of both worlds because it's a hybrid between s&t and banking i.e. a more well-rounded experience

But couldn't you also say it's "jack of all trades, master of none"?

Not knocking capital markets - I have an offer there myself so I'm just wondering. What are the exit opps like anyway?

Nov 11, 2009 - 11:50pm

when i interned in a capital markets team at a BB summer 08 I noticed most of the analysts in DCM/ECM really wanted to be in industry groups. I dont know much specifically about exit opportunities, but it seemed to me that people pretty clearly felt the exit opps were better for people in industry groups.

Nov 11, 2009 - 11:51pm

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