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Realities of Life on the Trading Floor

18/02/2015

Wondering what it’s like to work the financial markets? Kyrillous, an analyst on the global markets at investment bank Nomura, told us more.

Realities of Life on the Trading Floor

What markets are you working on as an analyst at Nomura? Could you explain what these are? 

I work on the Flow Credit Trading desk, where we trade corporate bonds and their Credit Default Swap (CDS) derivate across a variety of sectors and regions within Europe.

What kinds of clients do you trade for?

We have three main investor bases: retail, institutional and hedge funds. Retail generally represent individuals (through Private Banks or small brokerage houses) who are looking to invest their money in corporate bonds. Institutional investors are the big ‘long only’ funds, very often investing over a long time horizon. We also call hedge fundsHedge funds ‘Fast Money’ due to their ability to trade from the long andshort side and to regularly get in and out of trades very quickly.

What are your main responsibilities as an analyst in your department?

Initially the main responsibilities revolve around assisting senior traders perform their main tasks more efficiently. This involves booking trades, making sure our risk is in line, sending off daily P&L (profit and loss) reports, providing market commentary to other traders andclients, liaising with the research department on new trade ideas, and working with sales in compiling our trade axes (bond/CDS positions that we will be able to offer most competitively in the market).

Since then I have become responsible for my own trading book, where I am making markets/managing risk for Pan-European Investment Grade/High Yield Industrial companies, trading both corporate bonds and CDS.

How important is risk management in modern trading?

Probably the most important part of the job! Especially in a Credit Markets role which does not necessarily have the liquidity that you may find in Equities, Rates or Currencies. You always need to be cognisant of the various risks different bonds hold, whether it is overall market risk (beta), interest-rate, geo-political and most importantly individual credit risk. We examine these risks using various metrics not only for individual securities, but for individual trader’s books and the desk as a whole.

How did you find you first few weeks on the trading floor?

It was definitely a very steep learning curve and it took a while getting used to the fast-paced environment. As nearly every trader will tell you, you will learn very quickly whether or not this is an environment you will enjoy and thrive in.

How do you find the working environment and working hours?

Not as bad as I thought they would be, to be honest. At first, when you still are learning new systems/financial products and when there is a lot of admin work to be completed, you can easily spend 13+ hours in the office. However as you progress as a more senior trader your hours revolve around the hours the market is open: 7am-5pm.

What’s your favourite trading jargon word/phrase?

‘The Gapper’: A term we like to use on the desk after extreme/unanticipated macro moves in the markets which creates a lot of volatility and causes us to constantly reprice the 100+ securities we are responsible for.

Did you do any work experience before you got your graduate place with Nomura? How important was it for securing a front office position?

I interned on an Equities Sales desk before I started my graduate position. It made me sure that I wanted to work on a Trading floor, but also opened me up to the various roles and jobs there were on offer. I spent time on my internship on Credit desks after which I realised this was the market I wanted to work on. For this reason my work experience was essential for helping me secure my graduate position. 

By Jos Weale, Editor, AllAboutFinanceCareers.com