28 Investment Banking


Sales & Trading The wheeler dealers working the secondary markets


Every day, millions of financial products are bought and sold in the secondary markets where traders and salespeople in investment banks work together to trade for clients after a security’s initial issue.


In the secondary markets, salespeople advise clients on investment opportunities, while traders buy and sell securities on their behalf.


The secondary markets are divided into equities (stocks and shares) and fixed income, currencies and commodities (corporate credit, government debt, currencies, commodities and interest rate products). Within the fixed income division is foreign exchange (FX) - the largest market in the world, with an average daily turnover of $4 trillion.


High-volume markets like FX and equities have become increasingly traded electronically. The benefit is greater trade volume, which improves market liquidity as well as increasing the speed and reducing the cost of transactions. The downside is that less manpower is required so trader headcount has fallen dramatically in recent years, while employee numbers in the technology divisions (see Information Technology on p36) have risen.


There is also a range of ‘exotic’ derivative products within all these sectors, whose value depends on the underlying security.


Roles and career paths


Salespeople advise their clients when to buy and sell securities. They usually focus on particular products (e.g. government bonds) and clients, whether that’s high-net-worth individuals, pension funds or corporate finance managers. Salespeople take orders from clients, from the moment markets open until they close, and communicate them to the trading desks.


Traders track the markets and buy and sell products at the touch of a button. Your career will be defined both by what you trade (e.g. equities, foreign exchange, or commodities) and by the kind of trader you are. There are several types.


‘Flow’ traders buy and sell financial products for a bank’s clients, while proprietary (or ‘prop’) traders trade the bank’s own money. Historically, prop traders were at the top of the


Sales is all about people skills, resilience and persistence


Trading is increasingly electronic, and traders need to adapt


Traders need to assimilate a lot of information in a fast-paced, pressurised environment


key players FICC market share 1. J.P.Morgan 2. Citigroup


3. Deutsche Bank 4. Barclays


5. Bank of America Merrill Lynch


Equities market share 1. Goldman Sachs 2. Morgan Stanley 3. Credit Suisse 4. UBS


5. Barclays Source: J.P.Morgan analyst estimates


trader hierarchy, but many banks have reduced their prop trading activities following regulatory crackdowns like the Dodd-Frank Act in the US.


‘Execution’ traders place trades for analysts and fund managers – the key is to be both quick and accurate with the software, and able to deal with any problems should they occur.


There are also sales-traders, who act as intermediaries between sales and execution traders, and develop new business for the bank. They quote prices, take client orders, advise on the timing of the trade and execution method. They are seen as key revenue generators, and good client relationships are key to the job.


Within the electronic trading teams, you’ll also find quantitative analysts, who design, develop and implement execution algorithms using a


Opportunities Kudos Money How hot?


8/10 9/10 8/10 7/10


10.5% 9.5% 9.0% 8.9% 7.5%


Source: Deutsche Bank and J.P.Morgan analyst estimates


13.1% 10.3% 8.5% 6.7% 6.4%


You must be true to yourself, find the communication style that you are comfortable with and use it to gain clients’ trust and build your network.


Joe Squires Co-head, Rates sales Europe, BNP Paribas


the overview


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