What is Sales and Trading?
Sales and Trading is one of the services offered by an investment banking firm. Sales and Trading is generally split among different asset classes: equities, fixed income, commodities, currencies and derivatives.
Sales works with high net worth and institutional clients to facilitate trades that are then communicated to the investment banking firm’s trading desk. This is also called agency trading. These traders search various public and private exchanges (dark pools) to obtain the best price possible for sales. This activity often involves breaking up large trades into smaller ones in order to not overload any one particular market. The traders then attempt to reverse the trade internally or externally with counterparties to make a profit without incurring risk (a practice called arbitrage). This reverse trade is sometimes not the exact opposite but synthetically constructed using derivatives.
Traders act on behalf of Sales (previous section) and act on behalf of the investment bank trading its own money in what is called proprietary trading. Traders use a variety of trading strategies (arbitrage, long, short, etc.) based on fundamental or technical analysis and executed directly by the trader (discretionary) or by a computer (automated). Algorithmic trading is the automated execution of pre-programmed trading strategies. Hedge funds, investment banks, mutual funds, pension funds and other buy-side institutional entities use algorithmic trading. Arbitrage is one of these strategies along with delta neutral, index fund rebalancing, pairs trading, mean reversion and dark pool (private market) strategies.
What are common post-MBA Sales and Trading positions?
Companies hire MBA graduates into general Sales and Trading programs like Citi Markets. These programs typically include rotations in Sales, Trading and Structuring. Within Sales, you will learn to work on presentations, analyze credits, sell in-person and over the phone along with how to manage many client relationships. Within Trading, you will support traders, build financial models and validate trading strategies and risk management techniques. Within Structuring you will help design new securities, analyze market data, prepare presentations and develop product knowledge.
The summer internship is an important, but not essential, path to a full-time position. Most investment banks hire for Summer Sales and Trading positions and make full-time offers to select interns that usually include second year tuition. An example of a summer position is the Bank of America Global Markets Summer Associate Program.