This is the first part in a series on how to get a job in sales, trading and finance.
Love financial markets and business, political and economic news? Feel you will thrive in a noisy environment that is constantly changing and requires quick responses to unexpected events? Do you like making quick decisions under pressure? Do you have a quantitative mind? Then a career in Sales & Trading may be for you.
An internship at a major global investment bank is the best way to confirm whether this might be the career for you. Oh, and it will also help you land an awesome graduate position on a trading floor if you decide you’re up for it!
Disclaimer alert! This series is tailored for Australia and any advice provided is just a reflection of my personal opinions and experiences.
What is Sales & Trading?
Sales & Trading is a front office function of an investment banking which essentially facilitates the buying and selling of securities. This function is typically structured according to asset class, such as Fixed Income, Commodities and Currencies (typically grouped collectively as ‘FICC’) and Equities (i.e. shares in companies, such as Telstra or Origin), depending if a given bank covers and trades in these asset classes.
Where does Sales & Trading fit in within an Investment Bank? (Still wondering ‘what is investment banking?’ – read here!)
This function is distinct from other functions such as Investment Research or Corporate Finance (i.e. Investment Banking and Capital Markets). The former is responsible for publishing investment recommendations of the given investment bank (typically referred to as “house calls”) on asset classes and specific stocks and securities. The latter advises on matters such as mergers, acquisitions and financing options (usually debt or equity). All functions tend to interact, with the Capital Markets function relying on Sales & Trading to distribute and sell the issuance of new securities, and the Sales force in Sales & Trading responsible for selling the research and insights of the Investment Research department.
Primarily the Sales & Trading and Investment Research departments tend to be called the “sell-side”. The sell-side is responsible for selling securities and facilitating trading. Personnel who service investor clients, such as large institutional funds, are dubbed the “buy-side”.
What do you mean by “Trading Floor?”
Trading floors are commonly confused with trading pits. The latter were widespread in the time before the advent of computerised trading. Essentially, trading in securities was conducted in trading pits, where participants would run around, using sign language to communicate trading instructions and orders and make markets for securities in a confined environment. This was referred to as the “open outcry” means of communicating in trading. Hollywood has depicted these trading pits – the 1980s film ‘Trading Places’ with Eddie Murphy and Dan Aykroyd, for example. And there are some trading pits that still exist and are shown regularly in the press, such as the New York Stock Exchange. Very few trading pits are still used today, and those that are still around are essentially there to maintain tradition.
Trading pits are distinct from a trading floor of an investment bank, which may also be known as a “dealing room”. There are no people running around engaging in the ‘open outcry’ means of communication described above. On a trading floor, personnel will be seated in rows of desks, with 2-6 monitors (depending on their role), each typically with a Bloomberg terminal. With news constantly being made available, the trading floor can be quite noisy. Everyone is responding to information as soon as it is made available and trying to facilitate trading accordingly. There will also be information made available from overseas offices and local personal via a ‘squawk’ – which is essentially an intercom speaker. This noise and excitement is one thing I loved about working on a trading floor. Working so closely and quickly with others allowed me to learn very quickly.
Still interested? See Part 2 of our Sales & Trading series to learn more about specific roles within Sales & Trading, working hours and opportunities within Australia.