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Sales and Trading Overview V2


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My new and improved Sales and Trading overview for the Ivey Finance Club.

My new and improved Sales and Trading overview for the Ivey Finance Club.

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  • Common question – which is the most important? The short answer is they are all. They work together to produce profits for the investment bank. Normal market environment,
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    • 1. Institutional Equity Sales & Trading Overview June 29 th , 2010 By: Kyle D’Silva
    • 2. Career Background
      • 2 ½ years at Blackmont Capital
      • Desk Analyst (Combination of Research / Sales / Trading)
      • Hedge fund idea development
          • Merger-arbitrage, long / short, dedicated short, convertible / warrant arbitrage, warrant volatility, spin-offs, special situations
          • Developed various trading models (merger-arbitrage, DCF, relative value)
          • Produced special situations and event-driven publication for hedge fund clients
      • Interfaced with Investment Banking, Equity Capital Markets, Research, Sales, Trading, and Fundamental / Alternative PM’s and analysts on the buy-side
    • 3. Capital Market Structure
    • 4. Sell-Side Capital Markets Structure
      • Primary Capital Markets Investment Banking Raise capital (IPO & secondaries), M&A advisory
      • Secondary Capital Markets Equity Research Research publicly traded firms
      • Equity Sales Buffer between PMs and IB / Research. “Sell” IB deals / research ideas / trading ideas to PMs
      • Equity Trading Trade stocks on behalf of buy-side. Trade stocks on behalf of firm.
    • 5. The Age Old Question: The Chicken Or The Egg?
    • 6. Connections Make The World Go Round
    • 7. Equity Trading Roles
          • Trades as an “agent” on behalf of clients. Client specifies what they want exactly, trader executes.
          • Trades as “principal” for a client. Trader has discretion on how to execute trades.
          • Paid commissions in pennies / share, scaled.
          • Probability of getting a job right out of Ivey: 1%
          • Facilitates trades for clients of firm (buy-side).
          • Acts as a source of liquidity for clients.
          • Works with firm’s capital. Goal is to lose as little as possible.
          • Carries very few positions over-night, as they are risk-focused. Eliminates risk.
          • Probability of getting a job right out of Ivey: 0%.
          • Trades on behalf of the firm in order to make money on capital. Similar to a hedge fund.
          • Goal is profit.
          • Very specialized knowledge and are well connected.
          • Probability of getting a job right out of Ivey: 0%.
    • 8. Equity Sales Role
          • Talk to clients daily about what is going on in the markets
          • Discuss client positions and make recommendations about how to structure their portfolios.
          • Discuss “fundamental” (long only) ideas, discuss special situations / alternative / hedge ideas (short ideas, long-short ideas,
          • Main job on a daily basis is to sell Coles-Notes version of Equity Research in order to get daily trade.
          • Main job on a long-term basis is to sell Investment Banking product. IPOs, secondary deals.
          • Schmooze clients in order to get trading and investment banking revenue.
          • Take Equity Research Analysts to clients to discuss ideas and get intelligence on client positions.
          • Probability of getting a job right out of Ivey: 1%
    • 9. Sales & Trading Desk – Physical Set-up Assistants Sales & Trading Desk
    • 10. What Does A Trading Desk Look Like?
    • 11. What Does A Trading Desk Look Like?
    • 12. What Does A Trading Desk Look Like?
    • 13. Sales & Trading Desk - Communication Equity Research & Investment Banking
    • 14. A Day In The Life Of A Trader / Salesperson
      • 5:00am – Wake up, read the news, drink 1 st coffee.
      • 6:30am - 7:30am – Check over night markets, futures, market / economic / sector / stock specific news, understand the trends, drink 2 nd coffee.
      • 7:30am to 8:00 / 8:30am – Morning meeting. Research, IB, ECM, Sales, Trading will all contribute. Speak about client positions understand what is going on in the world that date.
      • 8:30am – Grab breakfast and coffees for the desk (3 rd coffee).
      • 8:30am – 9:29am - Call clients to get orders and understand bias. Make firm positions on stocks be known.
      • 9:30am – Market about to open, watch stocks, queue orders.
      • 10:00am – Salesperson is making calls to PMs and analysts. Potentially takes Research Analyst to a client to “market” the stocks they cover. Potentially go to an industry conference.
      • 10:30am – Head trader throws a pen at you for making a stupid trade.
      • 10:35am – Head trader high fives you for making a great trade.
      • 11:30am - Assistant gets lunches for traders.
      • 12:00pm - Salesperson takes client out for lunch. Discusses economy, portfolio, and stocks.
      • 2:00pm – Markets are dead, grab coffee for the desk (4 th coffee)
      • 4:00pm – Markets close, mark trade blotter, follow up with clients for confirm, ensure P&L is accurate.
      • 5:30pm - Drinks at Ki, Bymark, and / or Vertical with clients and / or colleagues.
      • 10:00pm – Back at home. Fall asleep and have sweet dreams of a fat bonus.
    • 15. How Do You Get a Job?
      • Know somebody on Bay Street.
      • Call any and all capital markets firms and beg the Head of Sales / Head of Trading for an interview.
      • Recruitment programs – Check bank websites.
      • Headhunters
          • Joe Kan -
          • Bill Vlaad –
      • Trading - Start trading and show that you have a history of success as a trader. Know the markets inside and out, and they may give you a chance.
      • Sales – Typically through IB or research, viewed as a place to retire without going to the buy side.
      • Typically have to start off at a small shop and move to a larger one once you prove your abilities. You will have the smallest and worst accounts to begin with, and must make them profitable.
    • 16. Key Success Factors
      • Knowledge of and passion for markets
      • Knowledge of industries
      • Proactive and aggressive bias
      • Tenacious
      • Having the “gift of gab” (being able to schmooze / sell)
      • Having industry contacts
      • Firm and team fit are the most important factors
      • Being a team player
      • Trading lingo is distinct. Learn the lingo!
    • 17. Industry Trends
      • Consolidation amongst dealers
            • Forcing buy-side to choose who they want do business with. Buy-side is “over-brokered”.
            • Power is shifting to buy-side.
            • Buy-side is bringing research and trading function in-house.
      • Sales and Trading are merging
            • The “Sales –Trader” is emerging as a regular feature on desks across Bay Street.
      • Specialization amongst Sales / Trading
            • Industry / market specialization. Allows a firm to garner a loyal following and therefore business.
      • Hedge Fund Sales / Trading
            • Rise and fall of this profession due to markets.
      • Return of the prodigal ex-pats – NYC and London workers returning to Toronto.
      • Rise of the machines – Program / algorithmic trading and the rise of the quant traders.
    • 18. Resources
      • Newspapers – WSJ, Financial Times, Globe & Mail, Financial Post
      • Periodicals – Barron’s, Investors Digest, Economist
      • Vault Guide to Sales & Trading
      • Bloomberg Certification, DealMaven, IBI, Marquee, Wall Street Prep etc.
      • CFA designation (Toronto CFA Society)
      • Canadian Securities Institute Courses
      • Alumni network
      • Current Ivey students
      • A personal copy of Wall Street
    • 19.
      • Q&A