Sales & Trading

1. Sales & Trading “Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered.” -Gordon Gekko, Wall Street

2. What is Sales and Trading? • Term that defines the symbiotic relationship between institutional salespeople and traders • Salespeople provide the clients for traders • Traders provide the products for sales • Traders are buying stocks or bonds for clients, and these clients filter in through sales

3. Importance in Investment Bank • Where the rubber meets the road in the investment banking industry • Sales department sells securities in companies the bank underwrites • Broker or sales representative writes the ticket for an investor order • The trader then makes the trade • Add incrementally to bottom line through profits, losses, and commissions • Raise the profile of firm in marketplace

4. Sales • Works to build “accounts,” or clients • These clients are buy-side investors • Sales people constantly interface with clients • They are responsible for relaying to the trader the clients interests and desired positions • Goal is to match the client with the product or service that best fits their needs • The total return on the trade often determines the money a salesperson makes

5. Trading • Responsible for taking a position in a security issue and buying or selling large amounts of stocks or bonds • Traders make money by buying low and selling high (the difference is the spread) • In a sell trade, this means selling at the highest possible price • In a buy trade, this means buying at the lowest possible price • Traders also spend time entertaining clients, often with sales team

6. Salespeople: Excellent communication skills Outgoing personalities and smooth “Bullshit artists” Traders: Mentally sharp High stress tolerance Quantitative Quick and tough Personalities *Market enthusiasm

7. “Working a Trade” • Adjust positions and grind the axe after morning meeting and research call • Salespeople on phone with clients to find out what’s up to buy sell • Markets open at 9:30am – make constant calls and watch screens • Call for the sale of a stock several clients want comes over top • Client calls and you tell him you have some stock he’s interested in without letting him know how much you can unload (don’t want to hurt the account) • Trader takes position on stock and trades on “market instinct”

8. S&T vs. Investment Banking • Salespeople and traders are independent, working on commission to bring to the market the financial products others create • S&T is a sprint; IBanking is a marathon • Must have NASD Series 7 and 63 to talk or trade securities • IBankers help clients raise money or advise on M&As; S&T professionals make clients money *Lifestyle – S&T professionals are the first-in and first-out in the investment bank, arrive 6-7am and leave shortly after markets close

9. Useful Websites • http://www.vault.com/nr/hottopiclist.jsp?ch_id=240&cat_id=3131 • http://www.collegejournal.com/researchindustries/researchindustries/salestrading-v.html?refresh=on • http://www.wetfeet.com/Content/Careers/Securities%20Sales%20and%20Trading.aspx