trading/sales/structuring

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mjbizzle87

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hi guys,
i am sitting level one this december and will graduate with an economics degree this june. i am applying for graduate jobs and would like peoples opinions.
i would like to become a financial analyst. i particularly enjoyed equities and derivatives, so i have applied for a BNP Paribas - equities and trading analyst role, however it gives me the option of trading/sales/structuring but i don’t know what the difference is and was wondering if anyone could enlighten me?
also is capital markets a better option than ibanking for someone who is planning on completing the CFA?
 
Isn’t capital markets what ibankers do?
CFA is more about asset management, although the corporate finance and valuation part of the curriculum can be useful background for ibanking, and many ibankers want to do asset management after they get sick of preparing pitchbooks and/or hunting for transactions to do.
 
Hi dude. BNP is a big player in equity derivatives, so they should have an interesting program in that respect. Anyway, this is what people in structuring/sales/trading do. I’ve organized it in this order, since it’s easier to explain this way.
1) Structurers in derivatives are people who design the products. For instance, they might put together a structured note comprised of a call spread, bond and out-of-the-money put. This structure would give the buyer limited protection against a market decline, in exchange for some of the upside. Sometimes, structurers get really “creative” and put together options whose payoff depends on periodic performance, volatility, or other weird stuff.
2) Sales people are the ones who market the derivatives to customers. You can be dumb as a brick but succeed in sales if you have great people skills. Happy hour is big part of this job.
3) Traders are the people who manage the risk for the derivatives positions. For instance, if you sell a bunch of call options, you are now short the market, short volatility, short interest rates, etc. Traders decide what opposing trades they need to take to offset this risk. They also generally have some discretion in taking opportunistic positions to make money off market movements.
“also is capital markets a better option than ibanking for someone who is planning on completing the CFA?”
So, this is the wrong way to look at this. You take the CFA in order to help whatever career you choose, not the other way around. Also, “capital markets” could encompass investment banking, depending on who you ask. “Sales and Trading” would be a more appropriate term to use here.
For what it’s worth, I think S&T is much more rewarding than investment banking, especially with respect to compensation/time.
 
As a side note, you probably should not say in your cover letter or job interview that you want to be a “financial analyst”. This term doesn’t really mean anything, especially with respect to the field that you mentioned. “Analyst” in this context just means entry level/trainee people.
 
iteracom Wrote:
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> What school? and GPA? any finance work experience?
i go to university in England, its a top 10 fwiw. should graduate with a 2:1 which is generally the desired grade. i dont have any relevant finance experience. Due to that would i have more success applying for internships?
 
I’m not familiar with the current finance opportunities in England. Are you looking to stay in the country or move?
In a good economy, econ is good because it’s flexible. But in bad times, experience and relevant major’s is everything.
 
ohai, thank you. great response, that is exactly what i was hoping for.
when you mention ‘sales people’(2) is this a sell-side equity analyst?
My understanding between buy-side and sell-side is that sell-side completes reports and recommendations for a brokerage firms clients, whilst buy-side recommendations are kept within the firm. But what is the difference in terms of roles they play?
which one of these would be a buy-side analyst?
 
None of these are buy side analysts or sell side analysts. This is a completely different field. “Buy side” means people who invest in stuff for profit. For instance, someone who does fundamental analyst for a mutual fund is a “buy side analyst”. “Sell side analysts”, like you said, have a similar role, but they sell research to other parties rather than use it for their own company.
 
mjbizzle87 Wrote:
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> 2:1
is this comparable to pass/fail?
 
So here goes the:
structures create the product, sales people sell it, and traders off set the risk.
buy-side and sell-side analysts work for other firms, and analyze the product produced and create ways to make money from it. buy-side shares his findings with his fund manager and sell-side sells the info. to others.
have i got that right?
i’m assuming buy-side is one of the harder jobs to enter. what’s the best course of action for someone with no experience in finance. trading seems like it offers alot of relevant experience.
thank you ohai, your responses are extremely helpful, you seem like you know alot about this. what do you do? if you dont mind me asking.
 
mar350 Wrote:
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> mjbizzle87 Wrote:
> ————————————————–
> —–
> > 2:1
>
> is this comparable to pass/fail?
in england the grade system at university goes like this:
1
2:1
2:2
3
fail
almost everyone aims for a 2:1, very few achieve a first but it is achievable, especially if you take one of the easier courses.
 
“structures create the product, sales people sell it, and traders off set the risk”
Yeah, that’s about how it works in the world of derivatives.
“buy-side and sell-side analysts work for other firms, and analyze the product produced and create ways to make money from it. buy-side shares his findings with his fund manager and sell-side sells the info. to others. ”
This is a bit confusing. First of all, all these people (S&T, IBanking, research analysts, etc.) could work for the same firm - just in different departments. Research “analysts” can analyze anything. Some research single stocks, others research credit, and some look at macro trends. Their work has little to do with the S&T that you are talking about.
“i’m assuming buy-side is one of the harder jobs to enter. what’s the best course of action for someone with no experience in finance. trading seems like it offers alot of relevant experience. ”
Err, not sure about this. There’s a pretty strong buy side bias on AF, since it’s a CFA forum, but it’s by no means the objectively best finance job. Trading -> research is not a popular transition, nor is the experience particularly relevant. Also note that “buy side” is defined on a company level, not on an individual job level. Buy side firms employ traders and salespeople, in addition to research staff.
 
Sell side gets a bad rap because people automatically get images of their head of cold calling strangers trying to get them to buy 50 shares in some stock.
Research, investment banking are both sell-side and very prestigious jobs.
Buy-side is touted as easier, since clients give you their money, you manage it, and get a nice % fee. If you can grow a nice base of assets, and as long as you do ok, generally you’re safe.
 
ohai Wrote:
——————————————————-
> 2) Sales people are the ones who market the
> derivatives to customers. You can be dumb as a
> brick but succeed in sales if you have great
> people skills. Happy hour is big part of this job.
>
- true and these people, if they’re good, kill it bonus wise
 
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