Sales and trading is one of the primary front-office divisions of major
investment banks
Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...
. The term is typically reserved for the trading activities done by sell-side investment banks who are primarily engaged in making markets for institutional clients in various forms of securities. The trading floor of these banks will contain
dedicated desks who generally focus exclusively on trading one form of security. These desks will more generally fall within the categories of fixed income, currencies, commodities, or equities.
In
market making, traders will buy and sell financial products primarily to facilitate the investment and trading activities of its clients with the goal of making an incremental amount of money on each trade.
Sales
The ''Sales'' component refers to the investment bank's sales force within the sales and trading division. Generally, sales members will be placed on dedicated desks just as traders are and will have a dedicated list of clients that they are responsible for managing. The sales role is the client-facing role of the S&T division of a bank, which thus necessitates sales members interacting directly with institutional clients in order to assess their needs, provide general market commentary, and work with other members of the desk such as traders or structurers in order to price and execute their desired trades.
The sales and trading function will also typically employ
financial analyst
A financial analyst is a professional, undertaking financial analysis for external or internal clients as a core feature of the job.
The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, ...
s that provide
trading strategy
In finance, a trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets. The main reasons that a properly researched trading strategy helps are its verifiability, quantifiability, consiste ...
advice to external as well as internal clients to support sales and trading. This strategy often affects the way the firm will operate in the market, the direction it would like to take in terms of its proprietary and flow positions, the suggestions salespersons give to clients, as well as the way
structurer
In investment banking, a structurer
Joris Luyendijk (2012)Interview: Head of Structuring equity-derivatives ''theguardian.com''
is the finance professional responsible for designing structured products.
Their solution will typically deliver ...
s create new products.
Trading
Banks also undertake risk through
proprietary trading
Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to m ...
(though this is subject to regulation within the US and certain European markets), done by a special set of traders who do not interface with clients and through "principal risk", risk undertaken by a trader after he buys or sells a product to a client and does not hedge his total exposure. Banks seek to maximize profitability for a given amount of risk on their balance sheet. The necessity for numerical ability in sales and trading has created jobs for physics, math and engineering
Ph.D.
A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is ...
s who act as
quantitative analyst
Quantitative may refer to:
* Quantitative research, scientific investigation of quantitative properties
* Quantitative analysis (disambiguation)
* Quantitative verse, a metrical system in poetry
* Statistics, also known as quantitative analysis ...
s.
See also
*
Investment banking
Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...
*
Stock trader
A stock trader or equity trader or share trader, also called a stock investor, is a person or company involved in trading equity securities and attempting to profit from the purchase and sale of those securities. Stock traders may be an invest ...
*
Trader (finance)
A trader is a person, firm, or entity in finance who buys and sells financial instruments, such as forex, cryptocurrencies, stocks, bonds, commodities, derivatives, and mutual funds in the capacity of agent, hedger, arbitrageur, or speculator. ...
*
Proprietary trading
Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to m ...
*
Trade idea Trade ideas (or trading ideas, or "Electronic Alpha-Capture") are investment ideas, typically equity related, ("long" i.e. buy, or "short" i.e. sell) which are sent by institutional stockbrokers to their institutional clients (i.e. this is not a s ...
References
The Investment banking handbook: Chapter 11 - Sales & Trading John Wiley and Sons, 1988
Banking
Investment banks
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