What are the capital markets/what is sales and trading?

26/6/2012

by Girl Banker

Listen to the iTunes podcast instead.

This is a very likely interview question.

The purpose of a capital markets division is to provide a range of financial products to investors and companies. The sales force specializes by product and will be the first point of contact for clients. Any buy or sell orders are passed on from sales to a trader, who executes and manages the risk associated with such a purchase or sale.

Many traditionally advice-only investment banks have incorporated capital markets activities to their offering because they wanted to offer a fuller suite of products to their clients.

Excerpt from To Become an Investment Banker by Heather Katsonga-Woodward.

The capital markets tend to be less hierarchical than corporate finance. Why?

Salespeople and traders are given individual revenue targets quite early in their career, possibly within 12 to 24 months of starting out.
It is possible for a junior to earn more money for the firm than someone senior to them so there is limited room for overbearing seniors – one minute the guy or gal is your analyst, the next they’re raking in more money than you.

Some view capital markets as more meritocratic than corporate finance. Why?

The primary goal is to earn revenue by trading or selling. It’s easy to measure revenue goals and hence reward performers accordingly.
Nonetheless, it’s possible to land oneself on a team where the existing sales people or traders won’t give you access to the good clients; they keep them for themselves and you have to wait until someone leaves before you can get profitable accounts.

Please see these related interview questions:
What is corporate finance or the investment banking division (IBD)?
What is the difference between an investment bank and a commercial bank?

Who is Girl Banker® and how can she help you?

3 Comments

Girl Banker®

I created my investment banking blog in 2012 as soon as I resigned from i-banking & published my book, To Become An Investment Banker.

Initially published at girlbanker.com, all posts have now been subsumed into my personal website under katsonga.com/GirlBanker.

These blog posts make it as straight-forward for you as possible to get into a top tier investment bank.

I have 7 years of front office i-banking experience from Goldman Sachs and HSBC, in both classic IBD (corporate finance) and Derivatives (DCM / FICC).

I'm also a CFA survivor having passed all three levels on the first attempt within 18 months - the shortest time possible.

Bruce

11/8/2016 09:50:42 am

I was the senior risk Arbitrage trader for 30 years at GSCO. Our area was comprised of tradiing and reserch arms. We were located centrally in the Equities trading room.

Both services were available and used by multiple parts of the firm including Investment Banking and similar. Restrictions were imposed on trading specific compamies securities that were being serviced to by other areas so as not to have a conflict of interest. My tenure was from 1966-1995 and I think my experience was during a period of great synergy throughout GS, great cooperation, great understanding and that the clients interest was always paramount.

I am not convinced that these aspects have been carried forward with the rise of and exceptionall dependence on technology.

Technology and the compartmentalization of theories beginning with Fisher/Black and the ensuing replacement of the individual with the the machine have exerted constant pressure to ever greater profitability to the detriment of the quality that truly identifies the company.

Being a public corporation created the need to satisfy stockholders who by their very nature care only about the stock and its performance in the market.

In order to perform it appears that certain liberties had to be taken with moral judgement, integrity and honesty.....and there lies the problem detrimental to society in general but not to the greedy. Bruce Mayers

Heather as "Girl Banker"

11/8/2016 09:51:11 am

Thanks for the comment Bruce. It's very insightful. GB

mahenra

11/8/2016 09:51:37 am

how can i get into investment banking sales ?

On Investment Banking