Trading Desk

I have an offer of trading internship with a BB in London for 2013 and have a choice between 3 desk:

(i) Credit Flow
(ii) FX Options
(iii) Rates (euro)

I am not asking 'which is best?' but was just wondering if someone could give me a bit of information about each desk, their products or links to further information. Particularly interested if their are any particular skill sets which would be more suited to one of the desks over others to help me chose which would be best for me.

I am going to meet all three desks which is obviously a big part of it but any advice would be appreciated even if it's just which you would chose and why!

Thanks

Investment Banking Interview Course

  • 7,548 questions across 469 investment banks. Crowdsourced from over 500,000 members.
  • Technical, behavioral, networking, case videos, templates. All included.
  • Most comprehensive IB interview course in the world.

Comments (13)

May 12, 2012

Congratulations! Unfortunately, I can't help you, but I'm looking forward to seeing replies.

May 13, 2012

I would be partial to the fx options desk, and depending on what type of credit i'd probably go for that next. Does the bank differentiate between high yield and high grade flow trading? high yield would likely be more interesting, but either would be a great desk. I'm somewhat biased and partial to options, so that's why I chose it first. i just think learning/understanding how to trade volatility is an awesome skillset to have an is transferable to other products (mostly other vol products obviously) but I think you would have a great balance between the big macro picture while getting a solid quantitative background through options

May 13, 2012

One of the most legit traders I have ever met and who I respect more than a lot of people said he started by trading Chilean Pesos. He said very similar things about learning about volatility and gaining transferable skills...Unfortunately, that's all the information I can offer you...

May 13, 2012

If you could provide a little more detail it would be great. Would credit be HY or IG? Would rates be bonds, derivs or options?
I would probably choose Euro Rates if like it seems it is derivs (swaps, IRFs, Bond Futures, etc...) I love rates, really macro product, related to politics (which I enjoy), it has a number of different securities you can learn, it has a very high flow so it's very fast paced and I think Euro rates is going to be a really interesting space in the next 5 years where you can learn a lot. My second choice would be FX Options. I don't really like credit... Bear in mind I am quite biased towards rates so I don't know how useful this can be....
I think what you should try to do is find a bit more about the differences and identify which one suits you best. I'll try to explain in a few words how I see it (again I'll assume in Rates you'll be doing derivs like swaps, IRFs, FRAs, Bond Futures...):
Credit: Great micro/macro balance. If you enjoy macroeconomics but also like looking at individual companies this will be great for you. Probably the least quantitative of them all (I don't really have first hand experience on a credit desk so not 100% sure).
FX Options vs Rates: FX and Rates are quite similar. The most macro products. You won't look at a companies at all. Options can be great and learning to trade vol a useful skillset like leveRAGE. said, but bear in mind it's the most quantitative of the 3 roles, it's not for everyone. Less fast paced than rates. In rates you won't learn anything about vol, but it might be a good balance between quantitative and cash products. So it's up to you and what you like.

May 12, 2012

Thanks for the replies everyone, I don't really know too much about the specifics of each desk other than what I picked up at interviews. Rates I heard euro bonds and interest rate swaps, FX desk focuses on Japan/Asia and credit desk I didn't really get much. I assume I will find out more about these types of things when I go and visit in a week or so's time but just wanted to get some information as to what to expect and to know what to ask.

A friend of mine said he had spoke to a trader who suggested rates was one of the best desks to start with as it had the broadest exit opportunities, any thoughts on that?

Also, when you say a desk is more quantitative, what exactly is meant by this? I hear it a lot but what sort of quantitative are required and how/whydo some desks need them more than others? Is it just being mentally numerically sharp (that's all they seemed to test at interview!) or being able to sit down develop models or go through complicated valuation equations?

Thanks again for the help, all responses welcome!

Learn More

Side-by-side comparison of top modeling training courses + exclusive discount through WSO here.

May 13, 2012

Well, first decide whether you're more interested in Macro or Micro. If Micro (ie looking at individual companies etc), then easy choice go with Credit. If macro, both Rates and FXO are excellent obviously. Personally I chose Vol products because of the added complexity and the ability to apply it to options on any other product. That said, rates is a fantastic area to be in. I work on an FX Options desk (in London actually), and I am fortunate enough to be able to trade rates also. As far as pace, vanilla FXO trading is actually not to different than swaps trading. Both are around the same speed.

    • 1
May 12, 2012

Well I study Economics and I am very interested in the Macro side in thats sense, but at the same time would be quite interested in the micro valuation side, guess it's just something I'd have to look into more.

@Revsly, it is actually a Vanilla FXO desk, would you possibly be able briefly describe the nature of some products that would be traded such a desk? Or if it's easier link to some information? I have done abit on google but my knowledge minimal and I'm just looking for a basic description of their structure to get started with.

Thanks

May 13, 2012

Not sure which bank it is, but sounds like the vanilla and exotics are not in the same book, so you'd just be trading/risk managing a book of vanilla calls and puts, generally o/n out to 5 years. Naturally, you'd also be trading spot/forwards also.

May 13, 2012

More quantitative means that the math involved is more complex. You won't develop pricing models and go through the equations, but you still need to understand what's going on. Bond and Swap math is fairly straight forward, while options are more complex. My intention is not to discourage you fro the FXO option. It's not rocket science, anyone who got into a BB program is capable of learning it. It's just a personal preference, some people don't like it as much.

If you say you are interested in the macro and micro side your best bet would be credit. It's a good combination of both.

Revsly, how is your FX desk organized? What I know of is a division between spot, forwards and options. When you say he'll be trading spot and forwards too is that just for hedging and risk balancing purposes or do you make markets in all 3 of certain currencies? Also, how is the flow in the exotic options space? Is it fast paced too or is it more like rates options with very thin liquidity?

May 13, 2012

Yes, spot/forwards/options are all separate. Within the options desk, we have a combined book of vanilla and flow-exotic options which is managed for the most part by the vanilla traders. Flow-exotic pricing is done by the exotics trader, then there are more structured-exotics as well. Flow-exotic pricing is slower-paced, and while there is a secondary market (broker market) there is no direct market like in vanillas (for vanilla vol you can call up another bank directly to have them make you a price).

Right, you wouldn't be market-making spot/forwards, but the spot/IR positions your running (or not running) is at your discretion. Might run a delta because I like a particular position, or perhaps because I have an asymmetric risk profile (gamma risk-reversal or am short/long vol and the delta position is a proxy hedge).

May 13, 2012

+1 on what revsly wrote

furthermore
if it's Deutsche, Barclays or UBS you should take advantage of their strength in FX and rates

May 12, 2012

As a follow-up, what sort of things would you look for in a desk (non-productive specific) to intern on, thinking of culture-wise stuff or other things to consider?

May 22, 2012