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Structuring within S&T, Pay, and Exit Ops.

FXSA2010's picture
Rank: Baboon | banana points 103

Looked through the forums and couldn't find a lot of info on Structuring. What do these guys exactly do and does anyone have a "day in the life" of a structurer.

Am I able to switch to trading and how are exit opps (want to go to buy side/hedge fund later)? This is for SA, for full time I would hope to work in trading, is this possible?

Working with structured finance products

One of our certified users describes the transition from structured finance to trading. He also discusses how valuable a structurer is to a trading desk. This is reiterated by other certified users. As structurers are usually rarer.

The transition from structuring to trading is the most natural of any roles...period.
Whereas the sales guys only need to know high level details to pitch structured products to clients, the structurer has to be THE MOST familiar with the product, all the risk measures and nuances that come with the product. Since trading is essentially the responsibility to hedge the desks exposure to these products (i.e. understand the risks and nuances), you can see why this is an easy transition.

So exit opps from Structuring:

  1. Structuring
  2. Trading (sell-side)
  3. Sales
  4. Trading (buy-side)

note: this applies to structuring roles where you actually get to price and develop "interesting" products, not those "structuring-in-name-only" roles where you can recommend buying an ATM vanilla call and selling an OTM vanilla call and refer to that call spread as a complex structure (lol).

The pay of Flow traders, sales and structuring are all in the same range. (Prop traders obviously surpass this average).
The thing with structurers, is if you only have 1 or 2, and they're invaluable to the desk, you'll pay them top dollar to keep them around. But if a hedge fund comes along an offers them top-TOP dollar to work for them...chances are you'll lose that key structurer. As was said before, for every 1 structurer, there are probably 2 traders and 3-4 salespersons.

Day in the life? Ask Revsly. He did Structuring as an SA and will be doing Trading as an FT (exactly what you were looking for)

Here FX Trader goese into more detail about the exotic finicial instruments that his desk worked on.

My desk was pretty hardcore exotics and our client-base were interested in pretty complex stuff. Things such as:

  1. Correlation swaps, american variance swaps/vol swaps, cross currency swaps
  2. asian options, faders, quantos, powers, lookbacks, compounds (lol i love these! options on options!)
  3. Capped/Floor variance swaps on baskets (for vega dispersion), Best-of; worst-of
  4. accumulative forwards, installment options, auto-renewal forwards, amortizing forwards.... and much more
  5. proprietary custom index products (this stuff takes a little longer, but when we do release it, the flow is heavy!)

The group who deals with the standard vanilla stuff you mentioned (range notes, etc.) we typically refer to as "Sales-Structuring". (i.e. they dont really need to have an in-depth understanding of how we price and develop these, they kind of just put together low risk run-of-the-mill stuff for risk-averse clients).

What is a Structured Product?

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Comments (217)

Jun 11, 2010

The transition from structuring to trading is the most natural of any roles...period.
Whereas the sales guys only need to know high level details to pitch structured products to clients, the structurer has to be THE MOST familiar with the product, all the risk measures and nuances that come with the product. Since trading is essentially the responsibility to hedge the desks exposure to these products (i.e. understand the risks and nuances), you can see why this is an easy transition.

So exit opps from Structuring:

1)Structuring
2)Trading (sell-side)
3)Sales
4)Trading (buy-side)

note: this applies to structuring roles where you actually get to price and develop "interesting" products, not those "structuring-in-name-only" roles where you can recommend buying an ATM vanilla call and selling an OTM vanilla call and refer to that call spread as a complex structure (lol).

The pay of Flow traders, sales and structuring are all in the same range. (Prop traders obviously surpass this average).
The thing with structurers, is if you only have 1 or 2, and they're invaluable to the desk, you'll pay them top dollar to keep them around. But if a hedge fund comes along an offers them top-TOP dollar to work for them...chances are you'll lose that key structurer. As was said before, for every 1 structurer, there are probably 2 traders and 3-4 salespersons.

Day in the life? Ask Revsly. He did Structuring as an SA and will be doing Trading as an FT (exactly what you were looking for)

Jun 11, 2010

Good summary, I was a SA in FX Options trading and structuring last year, so I can try to answer any specific questions in that regard.

Jun 11, 2010

"The pay of Flow traders, sales and structuring are all in the same range"

As you advance this is not true, as structurers do not have pnl. They can attempt to claim some shadow pnl but it's a tough site. Traders and sales will both be better paid.

Jun 11, 2010

Not the case at my shop. Deutsche Bank FX structurers are at a 5:1 ratio to sales. The reason they are paid so well here is because ONE deal that they come up with is sold by at least 5 sales persons to at least 5 different clients. At the end, they are viewed as invaluable because if we didn't have that 1 structurer, there's no way those 5 salespeople would've been able to generate that flow (i.e. sales weren't the ones who generated the novel idea, so they owe their sales credit to the novelty of the structurers idea).

Structurers are paid more for their rarity ...not their "volume" (sales) or PnL (traders).
And because you have so few of them who are top quality, they are able to command higher bonuses (it's a supply-demand issue).

These DB structurers know that if their ideas and the resulting flow go unnoticed, Barclays will be happy to pay them.

Jun 11, 2010
FXTrader:

Not the case at my shop. Deutsche Bank FX structurers are at a 5:1 ratio to sales. The reason they are paid so well here is because ONE deal that they come up with is sold by at least 5 sales persons to at least 5 different clients. At the end, they are viewed as invaluable because if we didn't have that 1 structurer, there's no way those 5 salespeople would've been able to generate that flow (i.e. sales weren't the ones who generated the novel idea, so they owe their sales credit to the novelty of the structurers idea).

Structurers are paid more for their rarity ...not their "volume" (sales) or PnL (traders).
And because you have so few of them who are top quality, they are able to command higher bonuses (it's a supply-demand issue).

These DB structurers know that if their ideas and the resulting flow go unnoticed, Barclays will be happy to pay them.

any idea how much these DB structurers make, including bonus?

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Jun 11, 2010

It's hard to pin it down. If your structured products desk is big on vanilla structures that you can almost do through your own retail broker, then Jimbo's point will hold. If your desk is bigger on correlation, volatility, swaps and baskets with barriers and triggers, PnL will increase substantially and structurers will get credit for putting such profitable trades together and concealing the spreads in the product.

The truth is structurers are harder to replace than traders or sales for the simple reason that there are less of them to go around and you only take a few, so you want to make sure you pick the right one.

You can imagine what would happen if an Exotic Structuring desk lost their only 2 structurers? the generation of ideas for complex derivatives would be left to sales (because traders are busy managing the existing risk). Salespeople simply do not have the in-depth knowledge to understand the pricing and structuring of the products; again they focus on high-level aspects. Imagine having a salesperson trying to figure out what "divergent volgamma and vanna" means. (That's where your structurer comes in). very few salespeople are actually able to explain the intricacy of the exotic product's volatility profile to a client (again, the domain of a structurer).

I've seen it happen and it's not pretty; the desk feels disjointed for awhile because clients call looking for some new idea to take advantage of some change in their market view; and the sales team feels out of their element trying to generate ideas and explain why it works. Result? Clients pull back their flow (very bad PR for that desk). So that's the key reason, the reputational and profitability damage that can be done by losing 1 structurer is too big a risk to take. (especially since some desks only have 1 structurer to begin with)

Revsly, on the desk you were on, how many structurers did you have?

My Exotics desk had about 20 sales, 8 traders and 2 structurers.

    • 1
Jun 11, 2010

Only a few in NY, London is bigger.

Jun 11, 2010

just how much of a quant role is this. Necessary to have a lot of comp sci background or no?

    • 1
Jun 11, 2010

No comp. sci background is required... at all.
Let's put it this way... someone who trades derivatives (e.g. exotics) is typically more "quant-ish" than someone who trades delta one (e.g. cash equities). So a structurer needs to be just as quant-ish as the exotics trader, with the added element of "creativity" to devise new ways of structuring the products.

Nov 5, 2010
FXTrader:

No comp. sci background is required... at all.
Let's put it this way... someone who trades derivatives (e.g. exotics) is typically more "quant-ish" than someone who trades delta one (e.g. cash equities). So a structurer needs to be just as quant-ish as the exotics trader, with the added element of "creativity" to devise new ways of structuring the products.

Hi FX Trader,

When you mention "quantish" do you mean formal quantitative background (math, engineering etc) or just having quantitative mindset? By latter I mean strong abstract reasoning skills/abilities. I do not have a formal quant background but I believe I can digest and break down complex concepts pretty well. I entered S&T a year ago from top-5 b-school but feel like the trading and structuring desks are not looking at me seriously because of my pre-MBA background. I am currently in the less glamorous part of fixed income (not DCM) and feel that I made a mistake venturing into S&T. Anyways, hope you can answer my question.

Stay curious

Jun 18, 2010

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Jun 12, 2010

Would you recommend learning stochastic calculus and taking other math classes to supplement structuring skills?

Jun 12, 2010

Thanks for all the comments, always appreciated.

Jun 12, 2010

Sorry for the newbie question, but is the structuring team responsible for creating structured products such as (I'm sure the names will vary depending on the firm) RENs (return enhanced notes), BRENs, etc?
If so, I know on the PWM side such products are very popular with clients and are pushed into a lot of portfolios to offer protection, etc. What is the demand for structured products on the institutional side (i.e.; are Pension funds, money managers buying a lot of pre-made structured notes or are they going to the desk and asking for a structure that fits their own markets views?).

Jun 11, 2010

I can't leave this

"Structurers are paid more for their rarity ...not their "volume" (sales) or PnL (traders).
And because you have so few of them who are top quality, they are able to command higher bonuses (it's a supply-demand issue).

These DB structurers know that if their ideas and the resulting flow go unnoticed, Barclays will be happy to pay them."

How many actual bonus numbers do you know, for structurers/sales/traders at vp level and above? I see from your other posts that you were an analyst on the desk, so I'm figuring the vp's aren't sharing their bonus figures with you. Top Structurers do not make as much as top traders or salesman, and the average line structurer is also going to make less. I know lots of traders and sales people who's total comp is in the 500k-2mm range, and structurers in the 250-750 sort of range. The head of structuring group will still make less than the head of the trading desk he structurers for. It's still a lot of money, but structurers simply don't earn as much as trading or sales.

Oh and barclays doesn't pay.

Jimbo

Jun 11, 2010

I'll go about this another way, and hopefully my point will be clear.
This is the true reason I tried adamantly to have my position changed from trader to exotics structurer.

It's based on a conversation at the end of my analyst stint with my senior mentor (who happened to be an FX MD).

He was discussing how the firm goes about deciding bonus numbers. They key was, "how little can we pay this employee such that he doesn't think its worth it to switch firms" (i.e. find the threshold at which the employee will say "fuck it, doesn't make sense to move across the street"). And what he emphasized was that because our sales force is so large, you pay a few star salespeople and you can nickel and dime some others because losing one salesperson of 35-40 isn't going to hurt us that bad. However, losing one structurer out of 3-4 can really slow things down (and replacing him may prove very difficult). So when paying that structurer, we consider the downside of losing him much more acutely than with the dime-a-dozen salesperson.....I was honest with him and told him, "I want to be valued in that manner" (we had a pretty open relationship, since he was my assigned mentor).

Next, let me go into detail a little further regarding how DBFX runs their desk. Sitting on top of FX Market share, DB likes to "put their money where there mouth is" with respect to structured FX products for clients. So in addition to developing ideas and structuring the products, our FX Structurers get to run a substantial "replication book" where we actually put our own capital at risk on the very idea we are pitching to client, in an effort to make them feel like we're not just trying to generate commission;but also stand behind the idea. Since this replication book is proprietary, the structurer gets credit for any gains (or blame for losses) associated with it. In essence, this gives some of our structurers an actual PnL to stand on.

This last point applies really to our London operation. Being the center of FX worldwide, London is always a battle ground for key FX talent. It's chief rival in this location is Barcap. We've always experienced a shuffle between the two shops in FX sales/trading/structuring/strategy. So even if Barcap likes to stiff employees in other areas of the business, they certainly dont pinch pennies when they lure DBFX staff across the City...it's honestly a perpetual contest to see who can poach the most valuable members from their respective FX desks

so as a general rule as we've all agreed, traders are the best paid. period. And on average, yes, a run-of-the-mill structurer will earn less than S or T. However, the role of the structurer varies from product area to product area and from shop to shop. As a result, their value and corresponding compensation isn't necessarily cut-and-dry (I've tried to show some examples here of where the added-value can occur)

Hope this helps clear some things up

--FXTrader

    • 5
Jun 14, 2010

FXTrader, i agree with some of your arguments, seeing you are talking from the exotics structuring perspective.

but somehow i feel most people who go into structuring stay on the slightly more plain vanilla perspective...maybe a few one touch notes and range accruals here and there, but a lot of basket notes/etc for retail/private banking clients...not as hardcore as some of the exotic stuff you speak about...

i've spent a few weeks of time with both fx structuring and commodity structuring...

Jun 14, 2010

FXTrader, excellent post! (someone save that!)

untilted, his point of view is from the DB FX angle. And we can safely say that if any firm is going to go exotic in FX structuring, it's going to be them.

Very good stuff!

Jun 11, 2010

Untilted, I'm definitely not talking about the standard, low-risk typically principal-protected range notes, and one-touch structures that PWM clients are interested in. My desk was pretty hardcore exotics and our client-base were interested in pretty complex stuff. Things such as:

1) Correlation swaps, american variance swaps/vol swaps, cross currency swaps
2) asian options, faders, quantos, powers, lookbacks, compounds (lol i love these! options on options!)
3) Capped/Floor variance swaps on baskets (for vega dispersion), Best-of; worst-of
4) accumulative forwards, installment options, auto-renewal forwards, amortizing forwards.... and much more
5) proprietary custom index products (this stuff takes a little longer, but when we do release it, the flow is heavy!)

The group who deals with the standard vanilla stuff you mentioned (range notes, etc.) we typically refer to as "Sales-Structuring". (i.e. they dont really need to have an in-depth understanding of how we price and develop these, they kind of just put together low risk run-of-the-mill stuff for risk-averse clients).

So you can see what I'm getting at when the desk is able to find people who understand the ins-and-outs of some of those products i listed (it's really a catch when they do and a substantial setback when they lose them)

--FXTrader

Jun 14, 2010

ya i see.

but just want to point this out to ppl on the board.

coz i dont think the sales-structuring guys get paid as glamorously as a lot of the traders and straight salesppl...but i feel most structurering guys go into those seats, with very few highly quantitative and sought after guys doing exotics.

creditderivatives, do you trade/structure creditderivatives? just curious.

Jun 11, 2010

I don't recall whether this was said before, but if you are a very good structurer and the traders trust you, they might let you open a prop book.

Jun 14, 2010

I'm not even in fixed income lol. I trade Equity Derivatives.

But this exotics stuff really applies to FX for the most part. Very few product desks see much volume in exotics the way FX does.
And your right, there are probably like 2-3 guys MAX in FX Exotics Structuring (Revsly confirmed this for CS-NY), so chances are the role isn't going to be available anyway.

    • 1
Jun 11, 2010

Revsly i touched on that a bit here:

"Next, let me go into detail a little further regarding how DBFX runs their desk. Sitting on top of FX Market share, DB likes to "put their money where there mouth is" with respect to structured FX products for clients. So in addition to developing ideas and structuring the products, our FX Structurers get to run a substantial "replication book" where we actually put our own capital at risk on the very idea we are pitching to client, in an effort to make them feel like we're not just trying to generate commission;but also stand behind the idea. Since this replication book is proprietary, the structurer gets credit for any gains (or blame for losses) associated with it. In essence, this gives some of our structurers an actual PnL to stand on. "

our replication book=your prop book

Jun 11, 2010

Ok great, figured someone covered it. It definitely helps if the structurer is thinking about moving to the buy side at some point. Gives him a track record, along with a reputation with clients.

Jun 15, 2010

There is also certain commodity desks that I would say this is true. I am sure skins or his past posts have talked to this.

But there is more than 1 or 2 situations, I could see where the guy coming up with the specific structures could be one of the highest paid folks.

Nov 4, 2010

Sorry to revive an old thread but just wanted to say thanks for the great info on a FX structuring role. In terms of rates structuring is it a no-brainer to accept an RBS offer in London?

Apr 2, 2011

definitely an awesome thread... I'm definitely looking to explore FX structuring during the SA stint this summer, so I was wondering if anyone had any input on good resources to look into before jumping onto this desk

Apr 2, 2011
boondogle:

definitely an awesome thread... I'm definitely looking to explore FX structuring during the SA stint this summer, so I was wondering if anyone had any input on good resources to look into before jumping onto this desk

Send me a PM with your e-mail and I can send you some materials I found useful for my last internship.

Jun 14, 2011

Is anyone here involved in Structuring in the Energy market?

Jun 14, 2011

pardon the ignorance but where does securitization fit into all of this?

Jun 15, 2011

Securitization is the process of transforming an asset into a security, so that it can be bought and sold in the markets, like for example mortgages. It is not related to structuring. In structuring you deal with securities, create a package of them combining typically different kind of derivatives in order to get a product that performs in a certain way under certain market conditions.

Jun 15, 2011

to answer any questions about pay...

http://www.wallstreetoasis.com/forums/structuring-...

Best Response
Jun 15, 2011

The exact role structuring plays varies from bank to bank. But a high level summary would be: assisting sales and trading in the design, pricing and marketing of bespoke structured products to clients.

All vanilla and standard exotic option pay offs will be priced and traded by traders themselves. Clients can come along with a specific set of investment requirements/limitations (eg time horizon, coupon level and/or frequency, basket composition, non-eligible assets, tax schemes etc). Those requests usually require a bit of tinkering to come up with an investment product that ticks all of the client's boxes. Trading is busy pricing and managing existing risks on book. Sales are preoccupied entertaining clients. So that leaves structuring to do the leg work on those. Trying out various basket compositions, playing around with pay off formulas etc. In essence, solving the puzzle.

Bespoke usually translates into higher margin. There can be a fair amount of sales and client education involved, which usually translates into some commercial exposure.

Request for structures can also be launched from a different source such as trading. If the bank wants to offload certain types of risks that are not easily traded in listed or broker markets, structuring can add value by coming up with a product that will both appeal to customers and fit trading books at the same time. Client gets a product that is priced attractively, bank gets some risk off the books, so win-win (in theory).

Do you have any specific questions ?

    • 6
Jun 15, 2011

Great explanation.

  • Anonymous Monkey
  •  Jun 15, 2011

Hi,

Can you explain me the difference between Quants Structurers and Sales Structurers in detail?

Jun 15, 2011

Great post. I want to go into structuring because I think it will give me the best prep for buy side trading. I believe so because, more than anyone, a structurer learns to see the risks that the market is composed of, and how best to exploit them. Ultimately, they are the most creative because they have the most dynamic role and spend the largest portion of time thinking about new and novel ways to profit from the changing market.

Would you agree with my assessment?

Also, how client facing are structurers and how clear is the distinction between them and quants (who price things)? Just how exotic are the products structurers work with. I'd also be interested in hearing a bit about your background if you're willing to share.

Thanks!!

Jun 15, 2011

Structuring is probably the worst preparation for working on the buy side of trading, sales and structuring unless you want to work for a very niche fund.

"They are the most creative because they have the most dynamic role and spend the largest portion of time thinking about new and novel ways to profit from the changing market." You need to stop drinking the kool-aid man. You're looking for ways to make clients happy while secretly burning them on overly complicated deals you barely understand.

Jun 15, 2011

You've forgotten to mention that the structuring guys are the ones coming early, staying longest on the floor and having a capped compensation (if all goes well) whereas we all know the excesses of sales & trading. However, I've seen a positive correlation between interns interning on a sctructuring desk and getting a ft offer for trading.

Jun 15, 2011

Bolz, what do you think of structuring?

Jun 15, 2011

Agree with GoodBread! Lil bit tweaking of your greeks and this payoff and that and boom, newly designed innovative solution. Definitely not saying it's not an important function though.

But these guys being first in last out is wrong in my opinion. During results season (for equities and credit) a lot of research guys are in 6am and leave 2pm. Probably doesn't happen with all research teams but I've noticed this with some of the good teams out there. Four quarters in a year with results season lasting 2 months each. You also have these IMS/trading updates keeping research guys busy. Then you have profit warnings.

Jun 15, 2011

I support Back Office in 13 NAM/LATAM markets, and DB structured/restructured deals are nothing close to smurfing. They are easy to break down, understand, balance and challenge discrepencies. For those of us that have been on the street for a minute, any back office associate knows right where go and how handle DB's basket/bundled securities.

Jun 15, 2011

That's not the same as fully understanding the risks created. You don't have to go very far back to see how screwed up things got. And a lot of corporate customers definitely do not understand the risks.

Jun 15, 2011

Again, completely agree with the poster above. But just to add that surprisingly it's not only corporates but even some buy-side investors. I've noticed fundamental cash equity investors having a go at equity derivatives. They are smart at picking up concepts. The sell-side guys who come in to lecture tell the story their way with their interpretation of Greeks and risks associated. At the end of the day they want the buy-side to trade with them. But I can assure you the way they themselves look at risk is quite different.

Someone in mid office saying it's easy to understand risk is just so wrong. It also highlights how complacent people can be; nothing against back or mid office guys but quite often they think in a very linear fashion not only in understand and interpreting risk but overall attitude in general. It's easy to break down a car looking at automated simulations and various diagrams but if it can cope when in motion with real forces against it is a different story altogether.

Jun 15, 2011

Structuring is VERY different bank to bank. The theory is that structurers price and develop new products and solutions for clients and are the go-to brainy folk on the trading floor with creativity to boot. Their perception on the trading floor though vary wildly.

At DB, they have their own reporting line and don't report into one of sales or trading, as they do in most other banks. At best, they can be self-functioning business lines, executing trade hedges themselves (without running a risk book) and going out to sell products. At worst, they tag along to someone else's trades/ideas and send a bunch of internal marketing emails saying that it was theirs. At DB, this variety is on show across the structuring asset classes (Macro, equity and credit are separated, not sure if credit has or is going to join up with macro). If you are considering joining one, you MUST do some detailed homework on your group to figure out which band you're going to be in.

Jun 15, 2011

Structuring can also refer to roles where you structure collateralized debt obligations / asset backed securities (sometimes referred to as structured credit).

In this capacity, the structurers are responsible for modeling the tranches and working with the lawyers and rating agencies to make sure everything is in place for the syndicate and sales team to sell the deal to potential investors.

This role is not sales OR trading, but is a combines elements of the markets (selling bonds) and banking (transactions take weeks/months to structure and and syndicate).

Jun 15, 2011

Hi All,

Could some explain the main differences between a 'buy-side' structurer (Understand fund structurer) and a 'sell-side' structurer if any?

Thanks.

Array

Jun 15, 2011

structuring is about designing interesting payoffs for hedging or speculation purposes for clients. As a structurer you create it, add a premium, then the exotics trader risk manages and trades the risk. I interned on the FX structuring desk if you want to PM me

Jun 15, 2011

Read 'Fiasco' by Frank Partnoy, that does a decent job of explaining the importance of appropriately 'structuring' a derivatives deal. May be a start to answering your question. Although his book must be a little dated now.

"God takes care of old folks and fools, while the Devil takes care of makin all the rules", P.E. 1998

Jun 11, 2010

some products have a high degree of customizability...so a structurer's job can include:

1)coming up with new structured trade ideas
2) building the pricers for these trades
3) ensuring the models are calibrated correctly (this is a joint effort with trading and the quants)
4) working with the sales force to help them understand and sell new structures
5) breaking out the risk of trades for traders

it's a hybrid position...structuring can be its own thing, or can sit with the trading desk, or can sit more with sales. i've seen it all three ways.

Jun 15, 2011

Does it help to work in structured products for a year or so in ibanking to move to a structurer's role in S&T?

Do structurer's work similar hours to traders?

Jun 11, 2010

i have no familiarity with structured products on the ibanking side or what that would entail. but sure some background is better than none. it probably be like switching from sales to structuring.

yes the hours are similar, maybe slightly longer

Jun 15, 2011

Most of the stuff you would see on the banking side is far less complex than what you will see in structuring. Structuring as a job is much more quant than anything in IBD.

Jun 11, 2010

most of the stuff on the trading floor is more quant than anything in ibd. not to say bankers couldn't handle it, it's just not what they do every day.

Jun 15, 2011

Do you need to know C++ or advanced math (linear alg, calc 3, diff eq, etc) or can someone with a couple stat classes, some calc, and is math smart handle it?

Jun 11, 2010

linear alg and calc 3 is not advanced math. but no you won't need it for most roles. and you don't need c++ either.

Jun 11, 2010

people who aren't scared of numbers can handle most of this. can you count in eighths? can you approximate mutliplication and division? the computer will do the rest in most cases.

some roles can be pretty quant heavy though.

Jun 15, 2011

lin alg and calc 3 are several electives above what is required so thats what i meant.

good im pretty good with numbers/fractions/etc.

Jun 11, 2010

required for what?

Jun 15, 2011

Hi

I work in structuring, on the structured credit desk (CDOs exotic credit derivs etc.) The basic job is to design complex derivative trades and sits somewhere between sales and trading. I spend time with clients but sales have the primary responsibility to manage the client relationship, I price trades but trading have the ultimate responsibility for risk positions, I have to read/understand term sheets but the legal team draft them, I work on product innovation but the quant team actually develop the models etc. If itaEU(tm)s a big complex trade you need to coordinate everyone, if itaEU(tm)s a small trade you can do more or less all of these jobs yourself e.g. I trade a couple of small products in the secondary.

On a good day itaEU(tm)s like conducting an orchestra, you feel like you are in charge of bringing bits of the desk together and have the best overview of the trade. On a bad day you take the flak for whatever is going wrong even if its not your fault - at a junior level you might get slammed because at ISIN isn't on Bloomberg or there's an error on a term sheet or risk marks doesn't stack up even though these things are not directly your job.

Overall itaEU(tm)s a good role if you more of an all-rounder and the comp is generally excellent (VP can earn $1)

tpt

    • 1
Jun 15, 2011

I'm starting work in structuring on a pretty quant heavy IR desk next year - how would the comp compare generally to that of sales? Would it be fair to say that there is a positive relationship between the level of quant and [structurer's comp, relative to sales]?

Also, we sit in with sales if that has any impact.

Thanks.

Jun 11, 2010

"Would it be fair to say that there is a positive relationship between the level of quant and [structurer's comp, relative to sales]? "

are you referring to your background or the nature of your work?

Jun 15, 2011

Sorry - nature of the work.

Jun 11, 2010

not really sure what quants get paid, but i think it helps, to a limit. quants in general are not the highest paid ppl at a bank.

Jun 15, 2011

Thanks. I wouldn't call my role a 'quant' role though - your post above matched my duties very closely (we also go to client meeting with the sales people etc.). Was just wondering who, in the long run, would generally earn more between a top salesperson and a top structurer (in IR derivatives), and whether there's a significant difference.

Jun 11, 2010

the salesman will earn substantially more.

Jun 15, 2011

I was recently explained the relationship between sales, trading, and structuring as an analogy to a restaurant...
the waiters are the salesmen, the cooks are the traders, and the chef that comes up with the menu is the structurer

what do you think?

    • 1
Jun 15, 2011

you dont belong in any of them if you needed that

Jun 15, 2011

it is very simplistic i know, but kind of intersting i thought

Jun 15, 2011

I have an option of going into either trading or structuring in a bulge bracket bank. Do traders get paid more than structurers or are salaries about the same for both? Thanks.

Jun 11, 2010

no they're not the same. is this all you are basing your decision on?

Jun 15, 2011

thanks jimbo. no, that's obviously not the only factor. i'm aware of most of the other differences, but this is one of those 'taboo' issues that's not discussed. so do traders get significantly more?

Jun 15, 2011

It's not that simple. It very much depends on the desk. A structurer in credit derivatives could very well make far more than a trader in, say, FX, if that bank is better at one than the other. Or vice versa. From what I've heard, however, structurers can apparently go up in pay more quickly early on, but nothing can replicate the potential later on for traders. Traders are the ones who hold the risk, so they have unlimited upside. So no, no structurer or sales guy will ever make $100MM, whereas as a trader could. But the chances of anyone making that much on a trader are damn near minimal, so if you focus on the averages they are probably all pretty close. I could possible see the "average" trading MD on a profitable desk making slightly more than the top structurer, but if we're comparing $3MM a year to $2.5MM a year, who really cares?

Jun 15, 2011

that's exactly what i was thinking, and please correct me if i'm wrong. i believe that structurers and traders on a desk that's considered to be pretty good at structured products make more or less similar $$ for the most part, at least at the associate level (maybe even VP). i'm sure that superstar traders could make a lot more, but that does not concern me (at least at this point). thanks.

Jun 15, 2011

Sales, structuring, and trading comp is pretty standard across an individual desk. More variation, obviously, for the traders. Sales and structuring have a more stable and predicatable cash flow.

Jun 15, 2011

thanks, this info helps. i'm just concerned b/c i'll be starting out as an associate in either trading or structuring and i'm looking about 3 years ahead. if there's not much difference in salaries, i prefer structuring for the first couple of years and then switch to trading.

    • 1
Jun 15, 2011

Depends on the desk, but on my desk, for example, doing structuring first for a year or two then switching to trading or sales is pretty common and can actually help you a lot. The more quant the desk is the more a little structuring experience will help you later on. But that time will be painful, I warn you. Long hours.

Jun 15, 2011

that's pretty much the plan... i don't mind some pain the first couple of years. should be useful for trading later on. thanks for your advice.

Jun 15, 2011

Do a summer in IBD - that'll give you a different perspective on the structuring hours. ;)

Jun 15, 2011

Are you kidding? The structurers on my desk work hours as long as any banker I know. The synthetic struc desks don't seem that bad, though...

Jun 15, 2011

Really? Your structurers do 100+ hour weeks? Wow, 13h/d is standard at my bank.

Jun 15, 2011

I know a couple people who work in commodities and currency structuring, they generally roll in around 7:45 and leave at 8-8:30ish. The people i know in credit structuring leave closer to 9:30 to 11ish but im not sure what the breakdown is between cash and synthetic desks in regard to hours

Jun 15, 2011

There have been stretches where the structurers on my desk worked 7 days/week for a month on end, 1-2am on weekdays then 10 or so hours each day on the weekends. I mean, Monday morning would roll around and these guys looked like shite.
I remember they told me stories about how the heat in the building would switch off at like 2am on weekdays and like midnight on weekends to save energy. A problem I will never have to worry about....knock on wood....
One guy on our desk didn't leave the floor for 36 hours straight. And this isn't like banking where you have stretches of down time--they have something close to the stress of the sales and trading desks, but the hours of banking.
But like I said, I also know structurers who work 12-14 days, few, if any weekends. Every desk and every shop is different.

Jun 15, 2011

I know this is an old thread, but can someone explain why structuring is described as stressful, and requires such long hours? What exactly are they doing for the entire day (with no down time, too)? I ask because Jimbo mentioned in another structuring thread that there was less getting yelled at, and the work is of a more cerebral nature. So where do the stress and long hours come from?

Jun 11, 2010

Imagine a situation where a client is waiting on a price for a structured product with:

1) multipled barriers/triggers
2) multi-conditional pay-outs
3) a variable basket of underlyings
4) floating interest rate exposure with barriers on that too!

just for starters....pricing this beast is undoubtedly a royal headache.

Not to mention...

1) Sales team is very anxious for you to hurry up with the price so they can close the deal and collect their sales credits
2) If you're not fast enough, the client might say "forget it! DB will get this done in a more timely manner"
3) The trading team wants to know how exactly you're structuring the deal so they can prepare to hedge it in advance
(they don't wanna be scrambling to hedge delta, vega, gamma, rho, vomma, vanna AFTER they're exposed to all of them)
4) If you don't get it done.... the traders can't make PnL, the sales team can't get credit.... essentially, the entire desk knows that because you couldn't get it done...they lost the potential to secure big margins on the trade

So yes, that restaurant analogy above was a good start:

Traders-Cooks
Sales-waiters
Structurer-Chef

...What happens if the Chef doesn't show up for work?....

-FXTrader

    • 2
Jun 15, 2011

Thanks FXTrader, that was really helpful. What background do structurers typically have? (i.e. BS/MS/PhD? majors?) Are programming skills a significant requirement for the job, or can you get by being mediocre at CS? Any resources you would recommend for someone looking to learn more about structuring (in terms of both color and skill set)?

Jun 15, 2011

www.wilmott.com you should find everything u need

Jun 11, 2010

No problem,

the guy above me posted wilmott... but I wouldn't worry too much about obtaining an in-depth understanding of what those guys discuss. Structuring is still very much a client-focused role, you just have to possess a deeper understand of the product's inner workings than the sales guy. Wilmott is really for the quants on the desk who will do the heavy-lifting of modelling the very complex trades. No one is going to ask you to be able to prove that stochastic vol models are applicable for a particular product... leave that to the quants.

Programming skills might be an asset, but that's a general rule. They aren't going to care if you can program before they offer you the job. So yes, you can be totally mediocre in CS.

In terms of academic training, I've seen structurers with "hard science" and engineering degrees, as well as structurers with pure a economics background (Bachelors is all that is necessary). Structuring requires you to generate ideas that take advantage of macroeconomic trends as well, so you can see why they don't need you to be a physics major to do well.

As anyone who deals with options will tell you, read the Hull book. Ensure you understand the dynamics of "the greeks", and be able to suggest ideas that allow someone to leverage a particular market view and you'll be well on your way.

    • 1
Jun 11, 2010
FXTrader:

No problem,

the guy above me posted wilmott... but I wouldn't worry too much about obtaining an in-depth understanding of what those guys discuss. Structuring is still very much a client-focused role, you just have to possess a deeper understand of the product's inner workings than the sales guy. Wilmott is really for the quants on the desk who will do the heavy-lifting of modelling the very complex trades. No one is going to ask you to be able to prove that stochastic vol models are applicable for a particular product... leave that to the quants.

Programming skills might be an asset, but that's a general rule. They aren't going to care if you can program before they offer you the job. So yes, you can be totally mediocre in CS.

In terms of academic training, I've seen structurers with "hard science" and engineering degrees, as well as structurers with pure a economics background (Bachelors is all that is necessary). Structuring requires you to generate ideas that take advantage of macroeconomic trends as well, so you can see why they don't need you to be a physics major to do well.

As anyone who deals with options will tell you, read the Hull book. Ensure you understand the dynamics of "the greeks", and be able to suggest ideas that allow someone to leverage a particular market view and you'll be well on your way.

do structuring desks only hire those straight out of undergrad or an MBA program?

Jun 11, 2010

honestly, structuring can be quite different at different places. You can have pricing guys straight out of IIT who might not be able to convey anything to a customer, or guys who are quite salesy. It runs the gamut.

Jun 11, 2010

Its interesting actually...it really depends on the firm.

Some firms hire straight from undergrad and don't care as much about your quantitative/technical background... others (like this one: http://www.graduates.bnpparibas.com/structuring.html) put a premium on programming ability and actually want at least a master's level education.

As Jimbo alluded to, some firms have structurers that are big on pricing and modelling, others have structurers who are very qualitative and "salesy" in their idea generation; some are lucky enough to have a hybrid of both.

Jun 15, 2011
FXTrader:

Its interesting actually...it really depends on the firm.

Some firms hire straight from undergrad and don't care as much about your quantitative/technical background... others (like this one: http://www.graduates.bnpparibas.com/structuring.html) put a premium on programming ability and actually want at least a master's level education.

As Jimbo alluded to, some firms have structurers that are big on pricing and modelling, others have structurers who are very qualitative and "salesy" in their idea generation; some are lucky enough to have a hybrid of both.

To be fair, BNP (or French banks for that matter) is not an accurate gauge in terms of entry level requirements for structuring. As a matter of fact, I actually had an offer from BNP for a structuring role a year back with just a bachelor's (I had a heavily technical background with an engineering major though with a quantitative finance-equivalent minor). French banks (BNP, Soc-Gen) are widely reputed to have one of the most quantitative recruitment process for S&T in the industry

At most banks (including where I am), structuring desks will in general consist of folks across a vast spectrum of background - it really is no rocket science and I presume anyone with a reasonable level of intelligence who wants to put his mind to it should really have no trouble coping with understanding the demands of the role (trade idea generation is another matter).

However, as most have already mentioned, the exact requirements and background required vary from bank to bank and desk to desk, but from my experience within fixed income (or FICC) considering nothing beyond first generation exotics, I'd say rates is probably the most technical asset class.

Jun 15, 2011

I got offer from a structured product position, there are only two departments, sales and product development and I am placed in sales, about the other department from what i was told, did product development, which I thought was structuring, but apparently it was some backoffice/administration work for the structured product FO, i.e. BO within FO if you can put it that way.

So is there are possibility that the "sales" desk consist of people for both structuring and sales? and what does structured product sales do? how is the work? the comp? how different is it from FX/IR/equity sales? What are the exit opps?

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Jun 15, 2011

The only buy side opp. credit/hedge funds, from a pure product knowledge pow

But you could definitely find jobs related to your quant skills

Jun 15, 2011

Will a transition to trading be possible in the future? I don't really see myself as the sales type...

Jun 15, 2011
hadwhoken:

Will a transition to trading be possible in the future? I don't really see myself as the sales type...

You could probably jump into an entry level trading job or do a masters and enter as an associate

Jun 15, 2011

What exactly is structuring?

Jun 15, 2011
econ:

What exactly is structuring?

Please see attached thread - some good info there.

http://www.wallstreetoasis.com/forums/structuring-...

Jun 15, 2011

The role is multi asset sales for institutional clients, what is difference between structured product multi asset sales and other FX/IR/Equity sales?

The goal is indeed getting into trading role, is it possible or when I return after a master they want to put me in sales again? I dont see myself having expensive dinner and models with high end clients... rather the one stirring at 6 screens and shouting...

Jun 15, 2011

bump!

Jun 15, 2011

I'll have a go at answering these questions myself but I would appreciate input from people with more experience. The answers below are based on anecdotal evidence and various posts on wallstreetoasis / other internet sites. It seems very difficult to find reliable information on structuring. I am considering applying for a structuring job and have no direct experience (I did a summer internship in IB but have decided that I do not want to pursue IB).

(1) Compensation
Generally matches average/good traders and salespeople, but will never be as high as top traders/salespeople.
This means something like:
Analyst: 60 + 40
Associate: 100 + 100
VP: 200 + 300
MD: 300 + 600

Of course these figures will vary depending on sector, shop and market conditions.

(2) Exit Opportunities
Relatively limited, given that structured products can be highly sophisticated and specialised.

Exit opportunities are probably limited to:
1) Structuring at other banks
2) Trading (assuming significant involvement in pricing, risk assessment, hedging)
3) Sales (assuming significant client contact)
4) Certain specific hedge fund roles

Jun 15, 2011
cobey60:

I'll have a go at answering these questions myself but I would appreciate input from people with more experience. The answers below are based on anecdotal evidence and various posts on wallstreetoasis / other internet sites. It seems very difficult to find reliable information on structuring. I am considering applying for a structuring job and have no direct experience (I did a summer internship in IB but have decided that I do not want to pursue IB).

(1) Compensation
Generally matches average/good traders and salespeople, but will never be as high as top traders/salespeople.
This means something like:
Analyst: 60 + 40
Associate: 100 + 100
VP: 200 + 300
MD: 300 + 600

Of course these figures will vary depending on sector, shop and market conditions.

(2) Exit Opportunities
Relatively limited, given that structured products can be highly sophisticated and specialised.

Exit opportunities are probably limited to:
1) Structuring at other banks
2) Trading (assuming significant involvement in pricing, risk assessment, hedging)
3) Sales (assuming significant client contact)
4) Certain specific hedge fund roles

Ain't so. Structuring is very quantitative and depending on the product (ex. mbs) there is a lot of asymetric information in a very growing industry. Info is $, enough said. You can get a cushy job at fanny or freddy or other gov. agencies like the fed. Almost all hedge funds have some structured exposure for diversification reasons and they would love a guy who builds these things and knows what makes them tick...cpr, prepayments, models... i think its some of the best exp. on the street and a ton of them end up trading... our head trader came from structuring. S&T isn't going anywhere and is still the bread and butter of most BB, where else do you get rich when the mkt tumbles, esp. when FIN REG splits all this shit up, S&T will expand to keep up revenues.

Jun 11, 2010
cobey60:

I'll have a go at answering these questions myself but I would appreciate input from people with more experience. The answers below are based on anecdotal evidence and various posts on wallstreetoasis / other internet sites. It seems very difficult to find reliable information on structuring. I am considering applying for a structuring job and have no direct experience (I did a summer internship in IB but have decided that I do not want to pursue IB).

(1) Compensation
Generally matches average/good traders and salespeople, but will never be as high as top traders/salespeople.
This means something like:
Analyst: 60 + 40
Associate: 100 + 100
VP: 200 + 300
MD: 300 + 600

Of course these figures will vary depending on sector, shop and market conditions.

(2) Exit Opportunities
Relatively limited, given that structured products can be highly sophisticated and specialised.

Exit opportunities are probably limited to:
1) Structuring at other banks
2) Trading (assuming significant involvement in pricing, risk assessment, hedging)
3) Sales (assuming significant client contact)
4) Certain specific hedge fund roles

Aren't these comp numbers low? I was told that the pay structure is more top-heavy for structuring than other S&T roles but that the VP/MD levels were similar.

Jun 15, 2011
cobey60:

I'll have a go at answering these questions myself but I would appreciate input from people with more experience. The answers below are based on anecdotal evidence and various posts on wallstreetoasis / other internet sites. It seems very difficult to find reliable information on structuring. I am considering applying for a structuring job and have no direct experience (I did a summer internship in IB but have decided that I do not want to pursue IB).

(1) Compensation
Generally matches average/good traders and salespeople, but will never be as high as top traders/salespeople.
This means something like:
Analyst: 60 + 40
Associate: 100 + 100
VP: 200 + 300
MD: 300 + 600

Of course these figures will vary depending on sector, shop and market conditions.

(2) Exit Opportunities
Relatively limited, given that structured products can be highly sophisticated and specialised.

Exit opportunities are probably limited to:
1) Structuring at other banks
2) Trading (assuming significant involvement in pricing, risk assessment, hedging)
3) Sales (assuming significant client contact)
4) Certain specific hedge fund roles

can someone please explain commodities structuring? all i know is MBS and CMO, morgage related stuff. How do you structure commodities? especially energy commodities.

Jun 15, 2011

(3)(A) Prestige of different sectors
From what I understand, FX and commodities are more prestigious (and therefore better paid) than equities and bonds/credit. The reason for this is that FX and commodities lend themselves to more complex and exotic structured products (to feed market appetite), where as equities and bonds/credit products are generally more vanilla (again, in response to market demand).

(3)(B) Prestige of different locations
It seems that London is the primary centre for structured products, although NYC is also large. I doubt whether this means that London compensation is higher than NY, given that London comp is lower than NY comp across most industries (eg: law, investment banking, consulting). I doubt whether there is much good structuring work outside of London/NY, although there are likely to be some niche markets in Hong Kong / Tokyo / Sydney.

(4) Prestige of different banks
I really have very little idea about this. I understand that DB and Barcap are the leaders in FX structuring (at least in London), with CS also strong in that space. I assume that Goldman and JP Morgan are relatively strong across all areas.

Jun 15, 2011
cobey60:

(3)(B) Prestige of different locations
It seems that London is the primary centre for structured products, although NYC is also large. I doubt whether this means that London compensation is higher than NY, given that London comp is lower than NY comp across most industries (eg: law, investment banking, consulting). I doubt whether there is much good structuring work outside of London/NY, although there are likely to be some niche markets in Hong Kong / Tokyo / Sydney.

Pretty sure that there is plenty happening in HK (and it will probably grow faster than any other markets).

Jun 15, 2011

(5) Hours required / quality of life
From what I understand, hours are approximately 8-8 Mon-Fri with some weekends and late nights as necessary (but not the norm). This seems pretty good for the levels of compensation we are considering.

(6) Type of work and how interesting/enjoyable it is
This is one of the primary reasons I am attracted to structuring. It seems to require a good mix of:
- quantitative skills (but nothing beyond some university calculus and statistics, plus a good understanding of option greeks and Black Scholes);
- verbal/writing/presentation skills (must be able to communicate clearly and confidently with clients and distil complex concepts into short written or spoken descriptions)
- macro-economic understanding and ability to read markets

To me, structuring sounds more interesting than both trading (unless trading really makes you high) and sales. Given the reasonable workload (assuming 8-8 M-F is accurate), I think that it would be an enjoyable job if you like finance/markets/options.

(7) Job security
Job security is arguably better than both sales and trading, because once you are established in a role, there are relatively few people who could replace you. Structuring is also important in both bull and bear markets, although obviously there is likely to be a squeeze during bear markets (I am sure that plenty of credit structurers have been looking for work in the last 2 years).

This is not to say that job security is objectively "good" (compared to, for example, law or a big corporate), but provided you are reasonably adept at what you do, you are likely to be able to find and retain good work in the foreseeable future. Logically, the markets for derivatives and structured products should only continue to grow in the future, providing more job opportunities.

Jun 15, 2011

(7) Job security
Job security is arguably better than both sales and trading, because once you are established in a role, there are relatively few people who could replace you. Structuring is also important in both bull and bear markets, although obviously there is likely to be a squeeze during bear markets (I am sure that plenty of credit structurers have been looking for work in the last 2 years).

  • you can't say that today, no one knows what's going to be around tomorrow, hence the ballin' salaries. If derivatives and structured products get their asses regulated off, banks will look other places. Structuring is still new and hot, but no one has job security like other industries. Nothing has come under more fire today than structured shit BC no one takes the time to learn and its so easy for congress to say its too confusing b/c theyre all 60yr poli-sci ass holes who give/get rub-downs for a living. New confusing financial shit comes out every day... got to be mobile in this industry or you'll get eaten by vultures!
    • 1
Jun 15, 2011

I also like Asia, but it is really a life decision. I know of guys who have spent 18 years working in Asia and now they specialize in Asian markets so that banks steal them from each other just to build out their Asian franchises. It is an interesting place to start, and truth be told I would probably like to work there as well, but just realize if you g oto Asia you should work their for at least a few years (and I'm not sure HK will change that quickly). If you want, I am sure that there will be an opportunity to work there at some later point in your career if you want/see that your bank is growing rapidly in asia--if you ask me that is the best choice since you can see from the inside how much demand your bank has in Asia, rather than signing up from that start and realizing that your bank does not have the market share that it does in America or Europe.

I have never interned or worked in Asia, so take this will a grain of salt, but search around this site, I know there are a few posters who have interned in Asia.

FYI, you have to do some research because BB trading operations are separated between HK an Singapore. Some banks like Singapore other HK. JPM, Barclays are in Singapore. GS, MS are in HK.

Jun 15, 2011

Yeah I'm not keen on living in Asia. Ideally I'd like to be in New York (or Houston) but happy to go to London if necessary.

Thinking about it more, my interests in sectors are as follows:
1. commodities
(big gap)
2. equities
3. foreign exchange
I'm not interested in fixed income / credit.

Anyone know who would be the strongest BB in commodities structuring? Would it just follow the strength of the S&T desks in general = 1. GS, 2. MS, 3. Barcap, 4. JPM, 5. ML

I also wonder whether commodities presents other exit opportunities like in-house hedging/risk/strategy desks at Exxon, BHP Billiton, etc. (or even management at those types of companies if you also have a good MBA).

Jun 15, 2011
  1. The French Banks are by far the leader in terms of structuring. I know BNP Paribas has this on their website:
  • "Structured Products House of the Year 2008" (Risk Awards -Jan 08)
  • "Structured Products House of the Year 2007" for the second consecutive year(Euromoney -July 07)
  • "Structurer of the Year, North America" (Structured Products -Apr 07)
    etc

I am sure if you go to Soc Gen it will say something similar.

Also, in terms of being quantitative- it is true you won't have to be AS quantitative if your dealing with the clients. However, BNP gets the clients requests and sends it back to a super computer in Paris, which can take weeks. You better believe the people surrounding that process know more than just elementary calculus.

Jun 15, 2011
soc0820:

4. The French Banks are by far the leader in terms of structuring. I know BNP Paribas has this on their website:
- "Structured Products House of the Year 2008" (Risk Awards -Jan 08)
- "Structured Products House of the Year 2007" for the second consecutive year(Euromoney -July 07)
- "Structurer of the Year, North America" (Structured Products -Apr 07)
etc

I am sure if you go to Soc Gen it will say something similar.

This seems accurate (although I'm not sure that the French banks are "by far" the leader):
- BNPP won the Risk Magazine 2007 and 2008 Structured Products House of the Year (http://www.risk.net/risk-magazine/news/1500929/jp-... http://www.bnpparibas.com/en/news/group.asp?Code=A...'%20Risk%20Awards%202008)

So it looks like the best bets for structuring are BNPP, Soc Gen and Barcap.

It also looks like London (dealing into Europe) is the best place to be: http://www.risk.net/structured-products/news/17327...

Jun 15, 2011

@cobey60: Thanks for the info (silver banana'd)! Those compensation numbers seem consistent. Definitely an awesome thread, imo.

@Gekko21: Which parts of Asia are you referring to in particular? I'm fairly certain it would entail HK and Tokyo, but I am not sure if India, Singapore and the Middle East nations demonstrate commendable prospects.

I win here, I win there...

Jun 11, 2010

S&T desk strength is not correlated to the strength of structuring.
if your S&T desk is strong and focused on very liquid vanilla instruments that trade individually and not as a packaged product...then a structurer on that desk is pointless

Jun 15, 2011

Check out http://www.structuredretailproducts.com > analysis & reports

This site has detailed breakdowns by geography, sector and issuer:
- Annual value of structured products issues is approx US $400-500bn (was steadily rising until the financial crisis)
- 60-80% into Europe
- Approx US $30-40bn into the US (less than 10% of global issues)
- Bank of America, Barclays, JPM, GS, MS, DB, CS, Citi have biggest market share in the US
- Equity related issues (single share, single index, share/index basket products) account for the vast majority of issues
- Retail issues account for 80-90% of global issues

Jun 15, 2011

Anyone?

Jun 11, 2010

Does anyone know anyone who has gone from CBO structuring to another area? Yes

Given the skillset, what are the logical exit opportunities? For either the buy- or sellside. Does it lend itself to any trading? Sales? CDO management on the buyside? Y

ou can do the same thing at another bank or go to buyside. And yes sales is an easy transition if you have the ppl skills, and i know structurers who've gone into trading. I used to do credit derivs structuring once upon a time.

Please be as specific as possible. Is it a valuable skillset? Ive had some ppl say it'd be hard to go into IBD from structuring, for example.

Yeah it's a good skillset. But it's not accounting based, so yeah it's not a logical stepping stone to banking.

Jun 15, 2011

Bump. Interested in this as well.

Jun 15, 2011

definitely not. my experience through a structuring desk at a BB (albeit just an internship) is that half the structurers want to be traders in the product they structure, the other half just whine about how they do the most intellectual work but get less pay than traders and sales guys.

Jun 15, 2011

I'm going to have to agree with Bearcats. Plus, what makes you think structuring guys don't burn out? And what exit opps do you think there are besides more structuring?

Jun 15, 2011

Yeah this is silly. Everything you said about sales or trading roles can be applied to structuring also. Or anything in banking.

Jun 15, 2011

Found this website not to long ago and had to create an account to comment. To say that there are no "exit ops" as a trader is complete BS - if you're a real trader, and have any semblance of social skills, you will easily be able to transition into a career outside of trading. Traders skills are highly respected. Anyone who thinks that there's no way out probably wouldn't make a good trader in the first place.

There are guys that have gone into I-banking, sales, strategy, commercial at energy companies, start ups, shit, a million other things. Everyone just needs to quit counting every footstep and go out and actually do something. The guys who aren't stewing in front of a comptuer are the ones out there making the real money

    • 1
Jun 15, 2011
youpeople:

Found this website not to long ago and had to create an account to comment. To say that there are no "exit ops" as a trader is complete BS - if you're a real trader, and have any semblance of social skills, you will easily be able to transition into a career outside of trading. Traders skills are highly respected. Anyone who thinks that there's no way out probably wouldn't make a good trader in the first place.

There are guys that have gone into I-banking, sales, strategy, commercial at energy companies, start ups, shit, a million other things. Everyone just needs to quit counting every footstep and go out and actually do something. The guys who aren't stewing in front of a comptuer are the ones out there making the real money

Amen and welcome!

Jun 15, 2011
youpeople:

Found this website not to long ago and had to create an account to comment. To say that there are no "exit ops" as a trader is complete BS - if you're a real trader, and have any semblance of social skills, you will easily be able to transition into a career outside of trading. Traders skills are highly respected. Anyone who thinks that there's no way out probably wouldn't make a good trader in the first place.

There are guys that have gone into I-banking, sales, strategy, commercial at energy companies, start ups, shit, a million other things. Everyone just needs to quit counting every footstep and go out and actually do something. The guys who aren't stewing in front of a comptuer are the ones out there making the real money

Preach!!!!

Jun 15, 2011
youpeople:

Found this website not to long ago and had to create an account to comment. To say that there are no "exit ops" as a trader is complete BS - if you're a real trader, and have any semblance of social skills, you will easily be able to transition into a career outside of trading. Traders skills are highly respected. Anyone who thinks that there's no way out probably wouldn't make a good trader in the first place.

There are guys that have gone into I-banking, sales, strategy, commercial at energy companies, start ups, shit, a million other things. Everyone just needs to quit counting every footstep and go out and actually do something. The guys who aren't stewing in front of a comptuer are the ones out there making the real money

/thread

Jun 15, 2011
youpeople:

The guys who aren't stewing in front of a comptuer are the ones out there making the real money

Awesome ... This whole post should be on some sort of "best of wso" list.

Jun 15, 2011
youpeople:

Found this website not to long ago and had to create an account to comment. To say that there are no "exit ops" as a trader is complete BS - if you're a real trader, and have any semblance of social skills, you will easily be able to transition into a career outside of trading. Traders skills are highly respected. Anyone who thinks that there's no way out probably wouldn't make a good trader in the first place.

There are guys that have gone into I-banking, sales, strategy, commercial at energy companies, start ups, shit, a million other things. Everyone just needs to quit counting every footstep and go out and actually do something. The guys who aren't stewing in front of a comptuer are the ones out there making the real money

You're talking in such an idealistic way here. What you said is basically like saying one's personality is much more important than one's appearance. Yes, personality is important but we all know that deep inside, appearance is the greatest factor that determines our first impression. In the same way, yes a trader can transition into any career (whether it be a professional gamer or astronaut) consider he/she has awesome intelligence, social skills etc, just like how a college dropout can revolutionize the computer industry (Bill Gates, Facebook) or a graduate from Occidental College can become the next US president. Come on, in this post I'm talking in realistic terms, and it's that structuring has the most "safety" in terms of compensation and job security.

What I'm trying to express of structuring can be viewed in this analogy: Drug Dealer(trader,sales) vs. Doctor(structurer). Yes, the drug dealer earns way more cash while investing less time whereas the doctor earns significantly less cash (albeit still very high in general terms, 6 digit salary) and could be said as working longer hours. However look at the downside - the drug dealer holds significant risk of being caught by the law (ex. traders/sales performing mediocre and being replaced) whereas the doctor has tremendous job safety (very difficult to replace a doctor without huge repercussions to the hospital esp those specialized in specific practices such as heart surgery), just like how it's going to be very difficult to replace a structurer, who's very specialized in interest rate derivatives).

So yes, in ultimate terms, the best trader/sales will earn more money than structurers, just like how the most successful drug dealers will bring in way more cash than the most successful physicians/surgeons. However I'm talking in realistic terms - on wall street average (which is who 80% of us with our ivy league degrees will be anyway), the job of a structurer is much more "safe" and "dependable" than that in trading or sales.

Please tell me if I'm wrong here? Kick out the salesmen, and there will be 10 others on the phone able to do the exact same thing. Kick out the trader, and markets will still be made with the 7 other remaining traders on the desk. Kick out the structurer? Good luck asking sales to structure a product with multipled barriers/triggers with multi-conditional payout, a varying basket of underlyings and a floating interest rate exposure. Oh you want the structurer back? Too late, he just got snatched by JPM.

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Jun 15, 2011

Bro, what were you expecting when you say that traders and sales guys will burn out after a short number of years and be unemployable???

Jun 15, 2011

What does a structurer do?

Jun 15, 2011

wow, talk about being misinformed.

Jun 15, 2011

Your analogy is decent but a little off in terms of risk. Assuming sales and trading are like being a drug dealer, being in structuring is like being a doctor in a war-torn country. No one is really out to get you but you are going to catch a bullet eventually. Whether it be the economic cycle or product obsolescence, there is going to be a time where no one needs your skills. Just ask the guys who were packaging CDOs.

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Jun 15, 2011

Lots of generalizations. Just wanted to point out that there are different types of structuring, asset side vs. liability side. And depending on the product, the two can be almost nothing alike.

Jun 15, 2011

it's almost as if you mean to tell me that instead of trying to find "the best career that exists on wall street bar none" i should try to find the role that best fits me, my personality, my priorities, and my skills?

getdafuckouttahere

Jun 15, 2011

From what I've seen and heard structuring is not a bad way to go at all. Exit opps seem to be broader than either trader or salesperson. Hours seem to be a bit worse, but the skills you learn would probably be worth the time invested.

Jun 15, 2011

I think you are all overestimating the replaceability of ANYONE in banking. Everyone is easily replaceable.

Jun 15, 2011
mrb87:

I think you are all overestimating the replaceability of ANYONE in banking. Everyone is easily replaceable.

Not true. Higher up you are/more experience you have, the harder you are to replace.

Jun 15, 2011

Assuming that they need to replace you.

Jun 15, 2011

Dude, you need to stop this. That comparison is awful and it is pretty clear you don't know what you are talking about. The market doesn't care the least bit whether your product was done according to the "relevant course material" and unless the traders and salesmen can make money with it, you'll be out on the street. The P&L derived from the products you structured is all that matters, banks aren't "innovating" for its own sake.

Jun 15, 2011

OP, I would argue that traders are hardest to replace. Market making isn't a simple matter when it comes to complex products. And its a talent that can only be cultivated with experience. (You can read all about instruments for hedging, market microstructure, managing a book- but it can't compare to all the intricacies in practice). On the other hand- a structurer's job is almost academic. In theory- one can learn all about it from a book. And there isn't that variance in performance- e.g. do you know how to structure this kind of pay off or don't you? vs. manage this book and let's see how good the PnL is--- and remember, while hedging- many "market makers" are actually doing a bit of prop on the side.

I know that senior structurers make considerably less than senior traders- and I'm actually surprised they make even that much. I feel like it could almost be outsourced to some smart Indian professionals, and the answers relayed back.

PS- I'm not in the industry, but this is the impression I've gotten from conversations. Welcome a practitioner's view on this.

Jun 15, 2011

A lot of people have some misinformed ideas of what structuring as a role actually is, and partly that's because it's not a well-defined role such as sales, trading, or M&A for that matter. Each bank is different, and structurers across desks and firms will also be different. There always seems to be a mix of ideas of what people think structuring entails, what structurers do, skills involved, etc. Some of it can very well be outsourced, other parts can't. Some structurers have plenty of client contact, others don't. I can try to break it down.

"Structured products" are generally notes that have some type of structured pay-off component. This has been described in this thread and in others. Firms that deal in such products generally need to have high levels of internal funding, otherwise the cash generated from issuing these notes doesn't exist to support the purchase of the options and derivatives embedded in them. These exist cross all asset classes. In FX, you will see the basket options, leveraged notes, etc that people speak about. In the rates space, it's more notes that simulate curve trades, such as leveraged steepeners, or allow the investor to take a certain view on rates. In credit, you will see credit-linked notes that pay out if a certain reference credit defaults, as well as things like first-to-default CDS baskets in note form. The underlying derivatives used depend on the specific note. Very quantitative; you need to understand what drives pricing in each of these products and their derivatives, and you need to be very creative to put things together to achieve an attractive payout that the investor is looking for.

You can make a note on anything, as long as you can source the underlying derivative. A note that references an underlying that pays you 0 up to 3% gain, 3% for gains between 3% and 10%, and 2x leverage for gains past 10%, while at the same time protecting 90% of your downside (maximum loss 10%) is at its core simply a combination of call, put, and binary options. If the firm is offering you this note, they simply sell/buy the opposite position in the market to hedge. Same goes with anything that requires an interest rate cap/floater/swap or a CDS contract.

However, like someone else had mentioned, ultimately, the trader takes the risk and the sales person takes the sales credit. The structurers will use models created by the quants to price up the products, but the trader makes a final price on strikes and the like. Structurers in these roles can be very quantitative and can often make the transition into trading, since the role require a deep understanding of how the components work.

The other part of "structuring" on the trading floor includes structured credit and securitized products derivatives, such as repackages, which includes CLOs, CDOs, CMOs, and total return swaps. These roles don't have well-defined descriptions. CLO structurers build models to analyze the returns of their particular leveraged loan portfolio and create capital structures and deal terms that appease investors, collateral managers, and trustees, each with its own alignment of interest. This aspect is quantitative but also requires a lot of negotiation of terms to get a deal done, and as a result extremely client facing. CLO issuance is picking up speed off the back of a return in the leveraged loan business, which itself builds off a return in private equity activity. Post-crisis, you don't see any CDO issuance anymore. CMOs are generally structured off its own desk, though the ideas behind all of this are the same--put the assets into a trust and issue tranches of notes off the trust. Depending on the trade, these can either be highly quantitative or simply boil down to negotiation tactics.

As far as pay goes, whoever said that those who take risk make the most is right. A trader that brings in 200 bucks a year to the firm is going to be compensated very well. On the same token, back in the pre-crisis days when all the credit derivatives that ultimately blew up were all the rage, structurers were making good money for themselves as well. These days, we just see a pull-back in anything too structured, so the space as a whole isn't as attractive or active as it once was.

Not so much a discussion about which is the "best" place to be... it depends on what you're looking for in a role.

Hopefully this sheds some light for everyone.

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Jun 15, 2011

Hi guys, interesting thread. I just did a placed summer internship on the FX Options and Equity Derivs desk - from what I gathered most of the trading ideas were generated by the sales force, and not the team of stucturers (of which there were always more than 2). Is it really fair to describe the role of a structurer as the one who generates the specific make-up of the structured product, and moreover, at their creative discretion? Surely they would also need to be much more client facing than what I see on this thread if they were to have a good idea of the needs of the clients? How client facing is structuring in that case?

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Jun 15, 2011
bellatrix.:

Sales sounds awesome (building and maintaining relationships) but as a career, it makes you easily replaceable.

Trading is pretty much the dream but it's like modelling - you last maybe 7-8 years then once you hit a certain age(assuming you don't get fired in between), you burn out and you leave, with no exits other than ... more trading.

Structuring seems like the perfect in-between, and career-wise there are only a few structurers in a group (ex. 15 salesmen, 8 traders, 1-2 structurers) making them very invaluable. Fire the structurer and he'll just get snatched by another bank, period.

For the most OTC desks (FX, rates, credits) don,t you guys agree that in S&T, the structuring role seems like the general "best" spot career-wise?

lol

Jun 15, 2011

This is one of dumbest posts ever.

Jun 15, 2011

I also have no clue...anyone out there that can help?

found a few threads that may help with a WSO search:

//www.wallstreetoasis.com/forums/structured-equity-g...GS

//www.wallstreetoasis.com/forums/what-is-equity-deri...trading-management

good luck!
Patrick

Jun 15, 2011

Internal-facing role or external? My guess is that if internal, you're doing marketing for the group/firm in general (branding, identity, communications, media relations). If external, it's a sales role (promoting the funding packages that your group creates for clients).

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Jun 15, 2011

I have a feeling that it is more focused on internal. That having been said, I'd have to make presentations/documents for external clients, as well as internal. I would have to make product brochures/pitchbooks (from my own excel modelling and scenario/market analysis), support the development of investment ideas etc.

To me, it seems similar to being an IBD 1st Year analyst, but with kinder hours (I hope!) and similar pay.

It's just strange though as, at my current place, there is no 'marketing' guy sitting on the S&T floor. Strange one!

Jun 15, 2011

From what you described, sounds a lot more external-facing to me. Might be worth it to ask the HR rep to send you an official description of the position. Will help your preparation and answer any questions you have...

Jun 15, 2011

As I understand the structuring team will come up with a new trade idea that they want to advertise to clients. That's where the marketing team will come in. My guess is that you will be mainly working on presentations which explain the deal and how it works. Then senior people in the marketing/sales/structuring teams will pitch the idea to clients.

It's sounds like a mixture of sales and structuring.

Jun 15, 2011

they originate 'shitty deals' to front-run clients on cdo's, that kinda stuff...

Jun 15, 2011

bump

Jun 15, 2011

hours?

Jun 15, 2011

Hours for Macro, Equity, and Commodity structuring approx 8-8 or 8-9 with some weekend work (though not common). Credit Structuring hours are considerably worse, can be 8-12 with weekend work fairly common.

Jun 11, 2010

FX Structuring can move to global macro buyside. It gives you a good perspective of FX derivatives and RV opportunities.

The second question no one can answer.

Jun 14, 2010

I concur with Revsly and his answer for #1.

For #2, there is an arguable answer if you are REALLY talking about sell-side traders and the products they want to provide liquidity in.

The answer is quite simple if you think about it: Pick the least liquid product.
Rationale? As with anything, less competition = wider spreads= better P & L for sell-side traders.

As a general rule of thumb, the products that are more highly structured/tailored are the ones that command greater spreads/commissions and thus more appealing to sell-side traders.

e.g. specialized FX derivatives with funky pay-offs and exercise constraints will be more attractive to the sell-side than run-of-the-mill vanilla options.

CD~

Jun 15, 2011

Bump

Jun 15, 2011

knock knock..

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Jun 11, 2010