ADD ADVICE TO FAVSales, trading and research
Sales, trading and research are roles that are played out within the capital markets division of an investment bank. Unlike corporate-finance roles such as those in M&A, working hours are a lot more regular as they are related to the times the markets open and close. Getting in early to prepare for the day ahead is a given.
’In the trading divisions you have to be in early because it is a global market and London spans the gap between the closing of the Asian markets and the opening of Wall Street,’ says Joanne Scott, Co-head of European Campus Recruiting with Morgan Stanley. ’Traders will start early with 7am meetings, but do not tend to stay late.’
Sales
Sales is sales in whatever industry you work, and in investment banking, like other industries, it’s all about relationship management.
A career in sales presupposes a passion for working in capital markets. It means getting up in the morning and checking the internet for what has been happening in the markets, reading the Financial Times on the tube and The Wall Street Journal at weekends.
Beyond keeping track of the amazing flow of available information, the second key skill for sales is to be able to disseminate that in a very concise way to your clients, who will include wealthy individuals, classic retail brokers, pension funds and other institutional investors.
Trading
Trading can either be propriety, in which you trade with the firm’s money, or so-called market making (or flow trading), in which you create liquidity for the bank’s clients (turn their assets into money).
Three types of information trigger the decision about whether to buy, hold or sell. First, there is technical analysis from the researchers. Second, there is fundamental analysis that comes from corporate news, economic data and exogenous shocks – events outside the financial world, such as September 11 or Hurricane Katrina – which have an immediate impact on prices. Finally, traders use their own sense of what is going to happen in the market.
Trading today is much more complex because of derivatives. Traders have to be very numerate to quantitatively and qualitatively analyse trading products in very short time scales – and they also need to be lucky.
Research
Researchers in capital markets do the same sorts of things as those in corporate finance. You need the same accountancy skills, such as the ability to read a company report and to analyse numerical data.
Researchers advise salespeople on the strategies they should be pursing within the salesperson’s area of expertise. At a more advanced level, researchers are involved in designing, pricing and developing complex financial products such as securitisations or derivatives for the salespeople to sell.
Key players
The success of investment banks in sales, trading and research can be ranked in many ways and each ranking will produce different results. However, in terms of equity research, UBS was named best all-Europe research team in Institutional Investor magazine’s 2006 survey of investors in European equities across a broad range of categories.
After UBS, which won for the fifth year in a row, came Citigroup, Deutsche Bank and Lehman Brothers, with Credit Suisse and Merrill Lynch sharing fifth position. The same publication also produced a survey of equity research providers on emerging Europe, the Middle East and Africa. In this case the winner was Deutsche Bank, with UBS, ING Wholesale Banking’s Equity Markets, Merrill Lynch and Renaissance Capital ranking in the top five.
