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What do traders and trade support pros do?
September 21, 2009 | Comments Off on What do traders and trade support pros do?
Many successful investment bankers know little about investment banking when they first apply for the jobs. The training programs offered by the banks are often enough to introduce newbies to the complex world of finance and transform them into professionals.
Despite the fact that candidates often know little about the inner working of investment banks, many do know that front office roles, such as sales and trading, are generally more lucrative than middle office roles such as client service, trade support and compliance.
The financial tsunami of 2008 impacted the well heeled financial community in more ways than previously imagined. Firstly, many junior and senior financiers alike lost their jobs; secondly, related industries such as financial publications and high end entertainment establishments see dramatic decrease in sales from their clients. The recent close down of the industry magazine Traders Monthly is a perfect example of how the turmoil has rippled to other sectors and industries.
What do traders do
Traders belong to the front office – the revenue generating part of the business. Their daily responsibilities include:
- Create and maintain pricing models
- Make markets
- Trade for commission (flow traders) or trade for profit (prop traders)
- Search for new trading strategy
- Liaise with institutional clients
- Create task automation tools, therefore, Excel, Visual Basic and C++ programming skills are required
Traders usually are required to generate excellent return on capital, which is above 20%. Traders have P&L responsibility for their book. In some rare cases, traders may have to write research reports, although this is not a common expectation.
What do trade support professionals do
Trade support professionals, sitting in the middle office, have the following responsibilities
- Book trades
- Ensure compliance by keeping complete record of trades, margin lending etc
- Document any portfolio restrictions, which varies by client
- Communicate with clients
- Escalate any unresolved trade breaks and other urgent issues to traders
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