This is a part of the Sales & Trading activities. The 'products' in S&T; are IRS (Interest Rate Swaps), CDS (Credit Default Swaps), commodities, currency hedging contracts, etc.
This is the 'Sales' part of S&T; and is usually mind-numbing work. If you see yourself as a smart, go-getter - then the Trading part of S&T; will appeal to you.
This is not core Investment Banking and has no connection with investment banking products.
IRS (Interest Rate Swaps) --> must be some combination of best bonds CDS (Credit Default Swaps) ---> insurance commodities ---> don't know ( What exactly would be in commodity and how do we make a product) currency hedging contracts ---> again some kind of insurance for risk
I guess these are insurance kind of products. Please help
The documentary INSIDE JOB says all the investment bankers who made a lot of money were those who were selling the collaterals(CDO) to various funds and financial institutions(2007 period before the recession). They were the one who made maximum money. That means S&T; has a lot of potential in terms of salaries??
And the designing of these products is done by financial engineers???
I think designing of these products ( which would involve a complex logic and a lot of number crunching - for example combining all the collaterals or may be some insurance as well as equities of the related products) should be pretty interesting work. Ain't it?? Any IDEA???
The documentary INSIDE JOB says all the investment bankers who made a lot of money were those who were selling the collaterals(CDO) to various funds and financial institutions(2007 period before the recession). They were the one who made maximum money. That means S&T; has a lot of potential in terms of salaries??
And the designing of these products is done by financial engineers???
I think designing of these products ( which would involve a complex logic and a lot of number crunching - for example combining all the collaterals or may be some insurance as well as equities of the related products) should be pretty interesting work. Ain't it?? Any IDEA???
Inside job is a great documentary.....However it does end up clubbing the blame on the investment banks as a whole than the trading arm of the bank, specifically those involved in mortgage back securities. Traditional Investment bankers had nothing to do with the crisis.
Yes I believe you are correct in saying that traders and those in S&T; get better packages than those in traditional IB as they are the top revenue generators of BB's. Even their timings are much better than traditional IB's. However, they are the first in the firing line during downturns.
There is a division called product structuring within the S&T; wing of an IB that originates these products and they are sold to various counter parties by the bank. And since derivatives, which are a major part of S&T; were unregulated, they ended up being huge revenue generators. However post crisis and after several regulatory reforms the picture might not be so rosy for derivates.
The documentary INSIDE JOB says all the investment bankers who made a lot of money were those who were selling the collaterals(CDO) to various funds and financial institutions(2007 period before the recession). They were the one who made maximum money. That means S&T; has a lot of potential in terms of salaries??
And the designing of these products is done by financial engineers???
I think designing of these products ( which would involve a complex logic and a lot of number crunching - for example combining all the collaterals or may be some insurance as well as equities of the related products) should be pretty interesting work. Ain't it?? Any IDEA???
S&T; hires from all walks. However, to actually design some of the most innovative products, you need to be working at the trading arm of a BB. This means that you need an outstanding degree (they LOVE IITians - all around the world!). They also prefer it if you have an MBA. You need to be strong in stats and probability. I don't think they need Financial Engineering to design these products. I also don't know how much credence they give to Fin Engineers. All the major S&T; people I know are MBAs.
Of course, that being said - since this is also one of the prized positions at a BB, it's difficult to get into. One person who has been networking with me from Cornell could not get thru' at BBs (at the easier to recruit Analyst-level) even tho' he is now going to MIT for his Masters in Electrical Engineering.
S&T; hires from all walks. However, to actually design some of the most innovative products, you need to be working at the trading arm of a BB. This means that you need an outstanding degree (they LOVE IITians - all around the world!). They also prefer it if you have an MBA. You need to be strong in stats and probability. I don't think they need Financial Engineering to design these products. I also don't know how much credence they give to Fin Engineers. All the major S&T; people I know are MBAs.
Of course, that being said - since this is also one of the prized positions at a BB, it's difficult to get into. One person who has been networking with me from Cornell could not get thru' at BBs (at the easier to recruit Analyst-level) even tho' he is now going to MIT for his Masters in Electrical Engineering.
Just adding on, the BB firms love IITians and if you are an IIT+IIM combo, you have a great chance to get in here, because your maths/stats/probability skills are more often than not, gonna be great. Not sure if I had mentioned it earlier in this thread, but the Markets side of an Investment Bank is broadly divided into 4 areas - Sales, Structuring, Trading, Research. Research is as the name suggests - you pick up companies/sectors/industries and publish papers predicting where you think they are heading and a buy/sell/hold recommendation. Sales is filled with smooth-talking-guys and girls (am not being sexist here, but you need to sweet talk some clients) - much less challenging work than others. Structuring is the creation of products by clubbing various things and it is these things that the Sales guys sell the products to investors. It is interesting and involves lot of brain-work, however the thrill is in Trading (it has a gambling addiction). Trading guys actually carry out the trades at their desk and generally the most high-pressure job in the Markets area. Every day you can view your profit/loss and you can get humongous bonuses ranging from 100% of your basic to 400% (if you are that brilliant, yes). However, if you are not, then you will be one of the 1st guys they will fire in case of markets going bad.
These have very little to do with core Investment Banking which deals directly with clients and companies throughout the world.
It is true, but Structuring only combines different products to create a new product (simply speaking), it is the Investment Bankers in DCM (Debt Capital Markets) who created the original single mortgage products...
As always, a great explanation. As a DCM investment banker, here are my two bits: a. Asset Based Securitization is coming back in a fairly big way. The spreads are narrowing (currently at about 250bps which is at par or better than high-yield issues). ABS is one of the finest ways to access cash that you need now, by putting up your assets b. Dodd-Frank is going to impose tremendous overheads on all financial institutions, not just banks. It's a huge pain to make sure that the next financial crisis is not a repeat of the one gone by c. even the lowest investment-grade of MBS, at a heady BBB can still find buyers, but the valuations now are extremely conservative d. As for the rating agencies, those were people who were not smart enough to be able to rate the products but didn't want to admit it. The end result was that the ratings were messed up and suckers bought into AAA-rated tranches that shouldn't have been marked any better than a BB+
Thanks Jamiroquai and Echoes 7 for the great explanation. This thread is one of the most interesting threads on PG and it is all because of you guys.
Few more questions on Mutual Funds.
1.Entry level positions in mutual funds 2.compensation/bonuses 3. nature of work 4. Pressure/Work timings 5. Exit options ( PE ???) 6. If I work in a mutual fund , am I allowed to open my own demat account and do trades?? These guys must be having best of information.
Thanks in advance and sorry if the question is irrelevant :shocked::shocked:
When you refer to 'Mutual Funds', you're probably talking about Asset Management. With the limited knowledge that I have from the Asset Managers in my class: 1. Research Analyst 2. Small fixed, large variable depending on returns 3. ?? 4. Tough / Long hours 5. This is buy-side, but not PE. I don't know many asset managers who want to 'exit' 6. Insider information has and is monitored very carefully by you're firms internal compliance department as well as by the SEBI. Try it and you will find yourself banned from the fin services industry
Thanks Jamiroquai and Echoes 7 for the great explanation. This thread is one of the most interesting threads on PG and it is all because of you guys.
Few more questions on Mutual Funds.
1.Entry level positions in mutual funds 2.compensation/bonuses 3. nature of work 4. Pressure/Work timings 5. Exit options ( PE ???) 6. If I work in a mutual fund , am I allowed to open my own demat account and do trades?? These guys must be having best of information.
Thanks in advance and sorry if the question is irrelevant :shocked::shocked:
Quote: Originally Posted by rockybelboa View Post as well as Indian institutions like Tata Capital, Axis Bank, ICICI Bank, Yes Bank, Religare, IFCI, HDFC and CRISIL
All these firms probably hired people as credit analysts. This is a role that most analysts look to escape after a couple of years because the hours are bad and your boss keeps eating your brains about deadlines. This would be tolerale if they paid you well - but the pay really really sucks. If you have a really positive attitude, you could do this for about 5 years before you lose it. However, once you figure it out - this is a great job for those who want to maximize job security and salary.
1.can u please tell what is the growth for a mba starting off as a credit analyst. 2.also u say that pay sucks.at wat pay normally does one start as a credit analyst.also what pay does one get after working as credit analyst for like 4-5 years
1st f all thanx a lot 2 evry1 (specifically jomiroqui n echos7) fr all the info............
all words apart wat we mst know s dat the financial sector in last 10 yrs has aquired some charactrs f a cashino. with fast flow f info n increase in risk-return ratio,investors and speculators have started behavin alike.........
if i m not verymuch mistken den steps taken even by MFs/HFs today would make finance experts f ystryers turn in their graves......
slowly but steadily and surely maths s losin its sheen in finance...
1st f all thanx a lot 2 evry1 (specifically jomiroqui n echos7) fr all the info............
all words apart wat we mst know s dat the financial sector in last 10 yrs has aquired some charactrs f a cashino. with fast flow f info n increase in risk-return ratio,investors and speculators have started behavin alike.........
if i m not verymuch mistken den steps taken even by MFs/HFs today would make finance experts f ystryers turn in their graves......
slowly but steadily and surely maths s losin its sheen in finance...
pre crisis yes........dont really understand how you can club Mf's and Hf's together and curious to know why maths is losing is sheen coz from what I've seen, quant hf's are pulling in more math grads into fin........
pre crisis yes........dont really understand how you can club Mf's and Hf's together and curious to know why maths is losing is sheen coz from what I've seen, quant hf's are pulling in more math grads into fin........
hw do we no dat we r nt in a pre-crisis era right nw??
rightly said dat MFs n HFs are diffrnt (HFs wrk in a vry broad area,diffrnt stategy n opn 2 some nly) but the idea behind HFs n MFs is the same .......managin risk-return ratio nsurin a gd return irrespective f markt perfrmnce.
maths grads r joinin fin......bt dat is not the point.. r de behavin(takin decisions/frmin strategis) mathemetically?????
with de charactr f a casino....infrmation and nt math based strategy which hs becom more powerful
p.s.-wat de teach in MBA/CFA(ny fin. relatd degree worth its name)is mathematical fin. nd not behaviourial fin.....tis s whre maths dsnt wrk....(like batsmen find malinga a difficlt bowlr fr hs unusual action r bowlr find hayden a dificlt batsman fr his unusual stand/battin approach)
IF FIN GOES DE WAY IT S GOIN DEN IT 'LL B NOTHIN BUT A "CYCLE OF BOOM N BUST"
1st f all thanx a lot 2 evry1 (specifically jomiroqui n echos7) fr all the info............
all words apart wat we mst know s dat the financial sector in last 10 yrs has aquired some charactrs f a cashino. with fast flow f info n increase in risk-return ratio,investors and speculators have started behavin alike.........
if i m not verymuch mistken den steps taken even by MFs/HFs today would make finance experts f ystryers turn in their graves......
slowly but steadily and surely maths s losin its sheen in finance...
hw do we no dat we r nt in a pre-crisis era right nw??
rightly said dat MFs n HFs are diffrnt (HFs wrk in a vry broad area,diffrnt stategy n opn 2 some nly) but the idea behind HFs n MFs is the same .......managin risk-return ratio nsurin a gd return irrespective f markt perfrmnce.
maths grads r joinin fin......bt dat is not the point.. r de behavin(takin decisions/frmin strategis) mathemetically?????
with de charactr f a casino....infrmation and nt math based strategy which hs becom more powerful
p.s.-wat de teach in MBA/CFA(ny fin. relatd degree worth its name)is mathematical fin. nd not behaviourial fin.....tis s whre maths dsnt wrk....(like batsmen find malinga a difficlt bowlr fr hs unusual action r bowlr find hayden a dificlt batsman fr his unusual stand/battin approach)
IF FIN GOES DE WAY IT S GOIN DEN IT 'LL B NOTHIN BUT A "CYCLE OF BOOM N BUST" :banghead:
Hey, I saw your message earlier and decided not to reply because I am not a 'mathematical finance' person. But I would like to tell you that you are getting a lot of things mixed up. Maths graduates do join finance and that is why they are so highly paid in some of the biggest HFs and prop shops on the wall street. you will be surprised to see Phd in finance and economics being a criteria for some of the positions. Also, when you say fin managers who are doing this doing that I think your sample set is restricted to only those people they show on television giving 'trade ideas'. In a lot of HFs & Prop shops, a lot of mathematical models and algorithmic trading is being used. In fact I talked to a senior person from Chicago Mercantile Exchange and he was surprised to see how/why in India we are still trading manually in some of the most volatile markets in the world.
What kind of right info ?
When you say interest rate has fallen I presume you mean American and European interest rates. It necessitates a free flow of money and increased liquidity but I am pretty sure it does not force any one to take more risk. It allows them to.
In MBA/CFA they do not prepare you to be a trader and probably that is why. I would like you to again please define what kind of finance managers you are talking about.
And hey, It will always be a cycle. both the parts are 'necessary'. We have to ride the boom and survive the bust.
pre crisis yes........dont really understand how you can club Mf's and Hf's together and curious to know why maths is losing is sheen coz from what I've seen, quant hf's are pulling in more math grads into fin........
which experiance will be valued more for BB in IB, a assistant manager(technical) in iron and steel company or a assistant manager in retail banking from biggest psu bank of india. Or will both of them be valued similarly without much difference.
Hey guys I got into a new IIM this year.So definitely BB companies are out of the question when it comes to placements.I thnk we can expect Boutique firms at the max.My question is whether it is possible to work and garner experience of a 2-3 years in a boutique firm and then aim to move to a BB firm.If so what does it really take to make that shift??Will a CFA help in making the jump?
which experiance will be valued more for BB in IB, a assistant manager(technical) in iron and steel company or a assistant manager in retail banking from biggest psu bank of india. Or will both of them be valued similarly without much difference.
unfortunately, both wouldn't add much weight to your resume
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