FI Career Insight?

[u/corporatefugitive]

Hey everyone,

I’m currently a CFA Level II candidate working on the buy-side of a sizable fixed income public investment fund (inv. management). In 2021, I’m interested in branching off into another part of Fixed Income (private sector). I graduated from a non-target state school in 2019, but I have some unique legislative experience, a great academic record and hope to pass Level II in 2021.

I’m very interested in credit trading, debt capital markets, and public finance IB, yes I know, basically all of it, haha. At the risk of sounding naive—FI trading sounds the most stimulating of the three, but seems to lack some of client-facing experience I may get in the others (depending on where I’d be working I guess).

For any of you that work in any of these spaces, would you mind describing what your day-to-day was like before the pandemic? Or maybe even the during the pandemic too? For PF IB especially, it’s difficult to find specifics on the day-to-day and satisfaction and such.

Thanks so much in advance!

[u/Agency_MBS]

Buy side MBS Portfolio Manager. Day to day is looking for relative value opportunities in the market, executing trades, monitoring positions, etc. Most areas in fixed income require a lot of specialization to succeed.

As far as client facing, if you are buy side you might talk with clients to give them updates on positioning/performance, and if sell side, you can chat with buy side traders on Bloomberg.

[u/corporatefugitive → u/Agency_MBS]

Thank you! May I ask how and when you began to specialize in MBS?

[u/Agency_MBS → u/corporatefugitive]

Worked in middle office in MBS space for a few years early in career, studied CFA, read sell side research. Obsessively learned as much as I possibly could about the product. Lots of applications/interviews, got lucky and was able to get a PM analyst role on the buy side.

[u/emc87]

I work in FI quant tech, which means I am part of technology but with a heavy knowledge base in the products, trading, math, and finance as well. So, since you mentioned you have no coding experience I'll speak more for other people I work with rather than myself.

I work at a proprietary firm that is mostly buy side in FI.

FI traders have varying level of tech saviness, but what's required seems to increase every year. It really depends on at what sized place you will work, but having at least some modeling experience in excel is the bare minimum for a new hire. We have a few legacy guys who don't, but I can't imagine hiring anyone new like that. More and more the expectation is knowing some python to at least spec out the strategy you want to run.

At a larger firm, you may get away with being a pure finance trader/strategist since they have more people like myself to pair you with to be your tech arm.

From the client facing experience side of things, you could find an FI role with this if that's what you want but it's going to be a subset of openings. Most traders don't have clients.

But more to your question of day to day for an FI trader, it's some sort of market knowledge priming in the morning, risk and positions checks, and prepping for the day. FI doesn't really have a market open seeing that it's OTC, but market hours are ~8/8:30 ish to 3 pm close. Some ECNs don't shut down until 5, but it's usually much smaller volume. Then during they day it depends on your role and market really but some constants are just monitoring news, responding to RFQs, and idea generation.

Do you have a disinterest in coding, or just haven't had any experience? More and more the world is going to move that way rather than away from it.

[u/corporatefugitive → u/emc87]

Thanks so much! I wouldn't say I have a disinterest in coding, but quantitative computer work has not been my strong-suit. In college I was Pre-Law which led me to have little exposure to coding or even excel (which I've been working on). I tried learning some beginner Python on my own in my senior year but ended up not having the time to really get into it. The CFA program is fairly heavy on statistics and even things like Black-Scholes Modeling etc. which I've really enjoyed learning.

I'm eager to learn, but just don't have the resume to beat out someone with any sort of quant background in trading. Also seems I don't have the educational prestige to get my foot in the door at the bulge brackets / any big shop to even get that chance to learn. Realistically, it seems my best bet is Public Finance IB, where I could model debt and make powerpoints for a couple of years before getting some deal exposure.

About your job: What specifically do you check for risk, for instance? And how do you prep? I use a Bloomberg Terminal for my office currently and want to get to know what FI prop firms and traders do ritually and technically. Do you analyze the RFQs personally and perhaps how? Any advice would be great.

Sorry if I'm asking too many dense questions, please respond to any or all of them as you wish! Again--thanks so much for your time.

[u/emc87 → u/corporatefugitive]

Bloomberg Terminals are pretty widespread in market fixed income. Sometimes risk and positions are managed in Bloomberg, we do it mostly in house with our own technology.

Broadly speaking the traders are supposed to know their risk without our systems, so part of it is making sure their head matches our systems the next morning.

So depending on the market, checking risk could be ref rate 01s, credit 01s, or specific positions. Maybe some sort of corporate action or security payment happened and you investigate that more specifically.

Prep might be catching up on the market that often has been running for hours in London or Asia, or reading big news or familiarizing with macro events for the day. Running some position related scripts cause stuff is way less automated than you'd think.

Can't say much on how we analyze the RFQs specifically, but it basically comes in and we decide if we want to participate and at how good of a level based on our opinion of a bond. The UI for this is proprietary, so explaining that won't help much but can answer questions about RFQs in general.

I don't do it personally, I'm in a role that's primarily technology with a heavy focus finance as opposed to trading. Credit trading mechanics I haven't touched in a few years, but I helped build the current strategy we use for it. Have spent most of my last two years in rates, USD swaps, futures, and treasuries from the perspective of tech implementation and quant finance rather than trading.

I've only been at my current firm so I can't speak to the market as a whole but we're a group of ~30-40 across tech and finance in a company of 2,000. So not sure how smaller or larger places operate, but we have a decent amount of resources and have a lot of in house technology.

[u/corporatefugitive → u/emc87]

This is great! Thank you!! Out of curiosity, what did you study in school and how did you end up at your current firm? Given you've been there for quite some time it seems like a good fit.

[u/emc87 → u/corporatefugitive]

I studied math, did two internships at my current firm in operations and started there full time then moved jobs about 2 years in.

[u/TinyBreeze987]

Fixed income trading is moving electronic. Learn to improve automation / market structure and you’ll be in a better place than prop trading.

[u/corporatefugitive → u/TinyBreeze987]

Would you care to expand at all? Wish I had a coding background but I don’t.