BANKING: BUSINESS AREA

FOREIGN
EXCHANGE
the prop book, the custodian
BY: LYNN STRONGIN DODDS
book, the settled trades and
the unsettled trades,” quarter of the daily trading
explains Seet. He believes volume. Th ey include in
that customer operations is a I
n the not too distant of the FX markets which is
past, the bulk of foreign no easy task. Currencies
exchange (FX) trading move on political and order – Deutsche Bank,
good place for someone to was done on the phone. In economic news but an UBS, Barclays Capital, Citi,
start their prime brokerage the past six years, growth unexpected event such as a Royal Bank of Scotland,
career. “Th ey will understand has mushroomed thanks to tsunami or terrorist attack JPMorgan, HSBC,
how hedge funds work and advances in technology can provoke wild Lehman, Goldman Sachs
how markets work because which opened the door to a fl uctuations. In 2008, for and Morgan Stanley.
they will be at the front end wider array of participants. example, the markets were
of the trades that are put Today, the market is no rocked by spiralling oil and OPPORTUNITIES
together at the hedge funds.” longer dominated by food prices, dire forecasts for As for career paths, foreign
corporates, tourists and the UK economy as well as exchange is quite similar to
RISK MANAGEMENT governments but also hedge Russian troops moving into equities and fi xed income
Risk management, says Seet, funds and other Georgia. Each one took the in that there are
is for people who are more institutional investors who market by surprise and researchers, salespeople and
interested in risk analysis, see FX as an asset class in its traders had to act quickly to traders. Th e diff erence of
“because the risk own right. As a result, the limit the damage and take course is that the
management division is rigours of the job may have advantage of the instruments are currencies
managing the risk of the become tougher but there is opportunities. and derivatives instead of
prime broker itself, to make rarely a dull moment. corporate or government
sure it fulfi ls its criteria in Th e FX market is the HEDGING bonds and equity products.
regards to its risk limits. A world’s largest in terms of Currencies are traded either Th e sales function is
career path starting in risk cash changing hands daily. on the spot or in the futures typically divided between
management can go Volumes continue to soar at markets, the latter the diff erent clientele such
anywhere from operating a staggering pace and this is essentially being bets on the as hedge funds or corporate
offi cer to fund manager, and set to continue. According future direction of FX price while the researchers’ job is
its good training for to the Bank for movements. Futures often to write reports for the
anybody.” In contrast, says International Settlements’ come in the form of a salespeople to keep them
Seet, “sales is for guys who latest triennial survey derivative whose contract is abreast of the latest
can sell, can go to parties, kiss published last September, based on the performance of developments and trends.
babies, and shake hands.” overall daily activity in the an underlying fi nancial Not surprisingly, FX
For those who want to FX market rose by a asset, index, or other requires people who have a
build a career on the trading staggering 71% to $3,200 investment. Th e large fi rm grasp of geopolitical
fl oor, equity fi nance is the way billion in April 2007 institutional players or events and
forward. “Th ese guys are very compared to April 2004. multinationals with a wide macroeconomics,
sharp, they will be running a Meanwhile, daily FX swap global reach often use these understand the inner
system on a Bloomberg volumes jumped by an even products to hedge against workings of the markets as
screen, and they will be more impressive 82% to the rise or fall of a particular well as strong interpersonal
running statistics, splitting just over $1,700 billion, currency. skills. For those on the
trades, shorting stocks. Th ey while over-the-counter Despite the multitude of derivative side – trading and
are the phone jockeys and option volumes climbed by players, Euromoney’s 2008 structuring complex exotic
they are how hedge funds 81% to $212 billion. poll reveals that the top 10 derivative products requires
interface with their prime Money is made by FX trading institutions a strong mathematical and
brokers,” Seet says
Cg
predicting the ebb and fl ow account for over three scientifi c aptitude.
Cg
WWW.CFAUK.ORG CAREERS GUIDE 2009 67
558-78 investment banking.indd 678-78 investment banking.indd 67 222/11/08 12:23:042/11/08 12:23:04
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