What bank gave you 2 internships? Was it Barings or Nigel's corner investment (oops there I go again, you guys call them MERCHANT banks) bank.
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Proprietary Trading at Investment Banks
- Thread starter London2002
- Start date
If you read again my post it was two different banks not one bank.
So there's more than one such remarkable institution in the "City"???
Originally posted by London2002
I had an argument with someone the other day about this who told me fx traders would be front running if they talked to amrket makers and salesmen, I know they do they gather short term thoughts on the market by talking with market makers and as I have already said the market makers aim to build up a position over time through quoting prices to keep their position if it is favourable and they feel it is right, but proprietray traders do not get involved on tapping liquidity when there is a large order unless it';s some pants bank.
Banks like Deutsche, UBS, Citibank and Goldman have major prop trading operations and siginificant market making teams to not worry about orders beng dealt with by the 'whole' team. Many banks also trade internally the prop traders through the market making desk they are not allowed to trade externally therefore they could not tap liquidity to fill a big order.
When you say big orders I presume you mean some of the m and a trades, the market making teams at the major participants are very capable of dealing with these without help from the prop traders.
London2002,
if you are really doing some prop trading then great. I applaud you for your initiative and achievement. But I think Bondtrader thinks it's odd that someone your age w/o no formal education is given all that responsiblity so quickly whereas in the US there are so many hoops to jump through - get a top school education, 3 rounds of interviews, then work on the desk for a few years then move up. If you have managed to skip all those then it's all good. Good luck to you!
You wrote,"Many banks also trade internally the prop traders through the market making desk they are not allowed to trade externally therefore they could not tap liquidity to fill a big order."
Having worked on both sell-side(ibanks) and buy-side(large institutional funds), I haven't heard about filling internally. I thought it was illegal for prop desk to do that, b/c of the Chinese Wall. Maybe in FX, where "frontrunning" is a nebulous concept then it's OK. But I'm pretty darn sure in equities that's NOT allowed. Because as an ex-buy-side institutional manager I as well as any money manager would be pretty pissed if a prop desk frontrun our orders!
Good luck to you!
-99
Thakns for oyur post as I think I have stated already I am not proprietary trading now I plan on a maximum of year and a half to be full prop trader but I have got onto a prop desk, front runnig as bond trader stated does not apply to fx and by itnernal trading, when a prop trader wants to buy or sell he gives the order to the market maker and is a market user or price taker whicever term you prefer to the market maker he deals at the market makers quote.
This is less likely with short term prop traders iwth huge positions who would not want to take liquidity off of the market makers.
This is less likely with short term prop traders iwth huge positions who would not want to take liquidity off of the market makers.
London - I'll leave you with this. You seem to have a fairly good concept (text book) of how dealing and prop desks function. Now get an job on a desk and let us know how the theoreticals hold.
BTW - what are your thoughts on options comprising a large part of a speculative position?
BTW - what are your thoughts on options comprising a large part of a speculative position?
Originally posted by Bond Trader
London - I'll leave you with this. You seem to have a fairly good concept (text book) of how dealing and prop desks function. Now get an job on a desk and let us know how the theoreticals hold.
BTW - what are your thoughts on options comprising a large part of a speculative position?
Everything I have said here was gained from my internship in those three weeks on the spot fx trading desk I learnt more than I did in one and a half years reading text books, they don't teach you shit just enough to make you breeze through the interview as a lot of gradutes actually don't even put ine ffort to learn about the area they are going to they expect to learn eveyrthing at the internship training.
Options were used sometimes when they were cheap and the vol looked good as a pure speculativ epositin on its own but they were used to cover decent sized positions in the long term where there was a risk of a significant swing, although a couple of short term traders used them as pure bets when the optin was cheap or to cover a large positin during extreme volatility, ie when the BOJ and MOF loked like they were gona prop up yen people were using OTC options to hedge their positions, which is sensible.
And the stuff you read in books about what influences markets and how they react to large trades it's all bullshit, the fx market works nothing like that in reality although obviously a traders are still trading medium and long term their view of the value of the currency.
Bond Trader-what you think about OTC options in speculative positions or prop directional positions.
I am much always happier taking a position via options. My professional experience is in fixed income so otc's were pretty much the way to go. However a large part of using any option is predicated on how well you actually understand options, option pricing and option strategies.