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Buy side equity trader

Buy Side Equity Trader

By Fintros — October 2017

In the spirit of strict anonymity, names and all identifying information have been removed from the below article. To learn more about Fintros - the leading anonymous opportunity platform for finance leaders - please visit

I’m a buy-side trader, which is quite different from the role of a sell-side trader - though I’m quite fortunate to have worked on both sides in my career. Currently, being on the buy-side, I primarily deliver and execute trades for our fund’s portfolio managers.

8:30: On a typical day, I’ll come in around 8:30 in the morning and immediately examine all of my overnight orders that executed in Asia and Europe. I’ll run the executed trades against my trading benchmark model to analyze the trades and calculate how well each trade was executed.

A trading benchmark is when, for example, a PM sends me an order to buy Vodafone at $8.72. I’ll then use that price to evaluate my performance on the Vodafone trade. In very simple terms my objective is to deliver a price that is as close, or even better, than the price that the PM originally sent me.

To execute trades, close to, or even lower than expectation, I’ll carefully consider every permutation to strategize the best ways to execute the order. For instance, I’ll look at the size of the order, market characteristics and possibly call some brokers on The Street to get some colour in terms of who has a block-size buyer/seller that I can cross the stock against. Essentially, I’m going to try and do as much research and diligence as possible before I place the order. Then, upon completion of my due diligence, I’ll actually place the order.

9:00: Once I’ve finished running my analysis on the previous day’s orders, I’ll quickly jump on a call with a PM to share the results. On the same call, I’ll share any news and/or insights that I may have gained from the analysis of my performance.

9:30: Following that we will break into a team meeting where we will try and get a good idea of what’s going on at the desk and who’s working on what, as there are often a bunch of side projects taking place. This is a unique benefit of working on the buy-side: getting to work on interesting side projects. These projects can be a big theme that’s going on in the firm – perhaps a big position that’s coming up, or a big block that we might need to do some research on to figure out pricing. For example, somebody might want to purchase a billion-dollar swap. Naturally, we would want to get a better idea of market pricing, so we might want to blast out some request for quotes (RFQs) to get some colour. Fortunately, at our firm there tends to be quite a few big themes that are going on at any given time.

Apart from that, I’m also included in many administrative activities that take place at our firm. An example here might include a broker’s vote – which is when PMs weigh how they want our firms commission dollars to be allocated across all the firms that they deal with in the acquisition of research. These firms might include a bulge-bracket bank like J.P. Morgan, who provides us with research and execution services. Alternatively, it could be a smaller shop who provides us only with the former, and not the latter. So, the idea here is how to calculate the allocation of commission dollars – or dollars in general – to these firms. In addition to the above, there might be other more administrative stuff going on, namely spreadsheets and models.

I’m not solely an equity trader, I also trade multiple asset-classes, which is a distinction that you get working on the buy-side vs. sell-side. On the sell-side you are more of an asset-class expert focused on equities, futures, etc. On the buy-side you have more of an ability to be a generalist. Currently, on the desk I trade equities and futures. In the derivatives space I execute options, listed or OTC, as well as swaps. The majority of my focus is, however, on the equities and futures space, but I do execute on other stuff as well, but frankly it is not as frequent.

The Afternoon (12:30 – 6:00): Throughout the remainder of the day we will be executing, as well as meeting with brokers who come in and inform us about technical relationships and give us some market structure colour as well as relaying to us the lay of the land. This might include something as simple as Trump, and how his pick for SEC Chair might impact the market structure, fees and other nuisances that could potentially affect trading. For example, if the SEC decides to impose a Maker-Taker removal pilot project and do away with the existing fees – then, how are the economics of trading going to change. All in all, it is quite exciting, as well as inherently different from what a sell-side trader would do.

On the sell-side, you will cover multiple clients. Whereas on the buy side, you are the client, so your request is the only request that you will be working on. That said, there is an agency model where you are covering multiple PMs, so you could say that they are multiple clients, but in general you represent one firm and you trade in the market as one firm. Meanwhile, in a bank you’re trading on behalf of CPP (Canada Pension Plan), OMERS (Ontario Municipal Employees Retirement System), OTPP (Ontario Teacher’s Pension Plan), plus other pension funds, hedge fund managers, asset managers, etc.

Furthermore, on the buy-side you are digesting market colour so you can feed it back to your PMs, whereas on the sell-side there are research guys who have the colour that you can feed to your clients. It’s a totally different field and your day-to-day is completely different. From a stress level, it’s probably quite a bit more stressful on the sell-side, given that client demands need to be acted on very, very, quickly.

All in all, I love my day-to-day and would recommend my career path to anyone who loves equities, capital markets and trading.

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