Market Division

Question 1

Execution Trader

Answer 1

executes orders
typically on exchange-traded products on behalf of someone else
external = client
internal = another terminal or trading desk (needs option to hedge)
PF passes order to execution desk(more specialised) try to later execute order in the bank
e.g put order in exchange or put banks together and let them compete until reached best attainable price

Question 2

Market Maker

Answer 2

provides liquidity to market
by pricing bid&offers to clients
makes money
always tries to hedge it recycle market risk
passes risk from one party to the other
conflict of interest
a) wider spread as possible (make biggest p&l)
b) need to stay competitive

Question 3

Property Trader

Answer 3

take market risk on behalf of entity
speculates - special entity within the bank (not very popular)
takes directional risk
maximise return

Question 4

Trader - depending on….

Answer 4

a) market
- -> equity; FX, FI, Commodities
b) matureness
- -> cash vs volatility trader

Question 5

Broker

Answer 5

traditional
—>matches seller and buyers in an OTC
Execution broker
—> places order in an exchange on behalf of someone (similar to execution trader) 
mostly seen in nature market 
—>sales agent (direct contact to client) 
bear market risk (but only temporary)
do not set prices

Question 6

Channels Trading with Clients

Relationship with Client

Answer 6

• voice traders (with sales)
• Bloomberg Chat (with sales/ top accounts)
• E- commerce (B2B venues)

Question 7

Intermediary Market

Answer 7

Direct access to exchange or similar semi-organised OTC Market
–> futures, shares, bonds etc.
Brokers (voice, chat)

Question 8

Sales

Answer 8

keeps Relationship with clients
soft skill (treatment, RS)
very sensitive to market movements (informed how market evolves every day)
in charge of closing deal with clients (using liquidity & price provided my trader/structurer)
different ways of measuring their added value (soft vs. hard money)

Question 9

Roles of Sales

Answer 9

by asset class - equity; FI etc.
by type of client - corporate, insurance
by regions: EMEA, Latam
by complexity of deal - flow sales vs structured product sales

Question 10

Structuring Team

Answer 10

try to fill more complex needs of clients (for which there is no readily available product)
combine different products (speak to diff. trading desks who price diff. products separately)
works on solution via:
a) risk management (e.g currency risk)
b) financing sources of public firms
Links more markets (willing to raise deposit + option)

Question 11

Analysts

Answer 11

elaborate reports of different nature
clients can be both in/external
type of reports
a) macroeco. (general view, cross-assets)
b) spec. market (securities, FI)
c) spec. sector (financials, utilities, sovereign)

Question 12

Desk Analysts

Answer 12

develop the Role from the own trading desk
Strategist
covers more specific issues (e.g relative value & correlations)
speaks to clients as well

Question 13

Research Analysts

Answer 13

belongs to Research Department
more academic
independent division

Question 14

Quants

Answer 14

build pricing models & price any complex derivative (“off-system spreadsheet”)
importance has grown since FM have become more technical & IT intensive
skillset : very quantitative approach (similar to structure)
development of algorithm, machine learning have transform nature of Q.A
ensure that data is interpreted/presented in the best possible way