Markets: trading, sales and research

This side of the bank is also known as the public side of the bank. It's here that investment banks assist their clients with transactions in the public financial markets where a wide range of commodities, currencies and financial products can be bought and sold. Bankers here offer investment advice, practical assistance in executing trades on behalf of clients, and may also, representing the bank, trade with clients.

What are the key areas of work here?

There are several main streams to the work on the bank's trading floor, and the bank's employees here are likely to specialise in one of the areas below. They're also likely to focus on particular industry sectors, or geographical regions.

Trading

A bank's traders are those who actually execute all the trades made at an investment bank. Traders will usually specialise in a particular kind of asset: a physical asset, such as oil; a type of financial product, such as bonds; or derivative products, such as options to buy a share at a certain date in the future. Some of their trades will be on behalf of clients, who might want to buy something they need, manage their risks, or make money through trading activity. Other trades might be with clients, for example, a corporate client might wish to purchase a large amount of a foreign currency from the bank. Finally, some trades will be done in order to protect the bank against market risks.

A trader will usually conduct many trades in one day. Requests from clients for trades usually come from a member of the sales team and traders will then provide a quote for the transaction the client wants to carry out based on their knowledge of the market. Once the client is happy with the quote, the trader will execute the trade.

Sales

The role of a salesperson at an investment bank, also known as a sales trader, a broker, or a dealer, is to function as the first point of contact at the bank for clients interested in using the bank's trading services. Salespeople will usually specialise in a particular industry or geographical region, for example, pharmaceuticals or Asian companies. They will use the reports produced by the bank's research teams, and other sources, to stay up-to-date with their area of expertise and to advise clients on what investments to buy and sell, drawing on their knowledge of their sector and of that particular client.

Sales people will get to know their clients well and will communicate with them regularly, spending the majority of each day on the phone to them, in the aim of generating trading orders. They'll also work closely with traders on formulating and managing trading strategies for the bank. In addition, they sometimes play a role in raising capital for the bank by marketing share or bond issues in which the bank is involved.

Research

The role of the research department is to analyse data, form opinions and produce reports, which are used by the rest of the bank. Those in the research team, like traders and sales people, usually focus on one industry sector or geographical region. Some of the main users of research reports are sales people, who use them to advise their clients on potential investments. The work of the research team, however, will also be used by traders, those on the investment banking side of the bank as they research and analyse potential deals, and by clients.

An investment bank's research team working on a particular area will produce weekly and monthly reports as well as ad hoc updates when an event happens that affects the markets. Research teams may also produce reports in response to client requests. The data they use to produce their reports will be drawn from a wide range of sources, including publicly available corporate records and data sources such as those provided by Bloomberg and Reuters.

How do these kinds of work bring in revenue for investment banks?

The main way in which investment banks make money from trading and related activity is through the commission that they charge for every trade they do, which is usually a percentage of the value of the trade.

Who are the key clients of this part of the bank?

Corporates: Large companies might come to investment banks' markets teams to buy supplies of a commodity they need, for advice on how to use the markets to protect themselves against risks their business faces, or even for advice on how to invest surplus cash they hold.

Funds: Funds clients, such as hedge funds and asset management firms, are major clients of investment banks' market teams, who offer them crucial advice and assistance in investing the very large sums of money they manage.

Individuals: Investment banks might occasionally assist high net worth individuals who wish to invest in the financial markets.

How long do deals here take?

Trades can be completed in a matter of seconds and anyone at an investment bank involved in trading is likely to see many go through the system in one day. However, it's important to note that every trade is followed up by a confirmation and settlement process, which may take another few hours, or even days, to complete.

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