Sales and Trading (S&T) Overview and Vocabulary

Comprehensive vocabulary flashcards covering the roles, desks, regulatory environment, and career path of the Sales and Trading industry based on the SalesAndTrading.org introductory course.

Govie bond trading

A term often used outside the U.S. to refer to government bond trading; in the U.S., it is typically called treasury trading.

Superday

The final stage of the interview process involving a series of interviews by multiple members of the firm, followed by a collaborative hiring decision.

Coalition

A company that compiles league tables and leader boards for various product groups and desks within the Sales and Trading industry.

Balance sheet

The defining aspect of an investment bank, referring to the bank's ability to backstop trades based on retail deposits and capital; it determines which 'riskier' activities a bank can support.

Warehousing risk

The process of placing risk onto the bank's balance sheet, such as holding illiquid credit assets that are difficult to hedge compared to liquid securities like treasuries.

Risk-weighted assets

Multi-variable formulas used by regulators and banks to determine how much capital must be reserved for specific activities based on their risk level.

Market making

The core of modern trading where traders buy or sell to provide liquidity to clients, typically generating profit from the bid/ask spread.

Book

The collection of specific assets and securities held by a trader at any given time.

PnL

Short for Profit and Loss; the financial measure of the gains or losses generated by a trader's book management or a desk's activities.

Sales

A role responsible for managing relationships with accounts (such as hedge funds and pension funds) and acting as an intermediary between the client and the trader.

Sales Traders

A hybrid role that blends sales and trading, often found in heavily automated areas like cash equities where risk is handled algorithmically rather than warehoused traditionally.

Quants

Professionals who develop pricing models and systems; in complex areas like equity derivatives, they may act as hybrid quant-traders responsible for PnL.

Structurers

Professionals who create innovative, bespoke products to give clients specific market exposure they cannot obtain through traditional off-the-shelf securities.

FICC

An acronym for Fixed Income, Currencies, and Commodities, representing a major division of the trading floor.

Rates Desk

A desk dealing with government-related debt and interest products, including treasuries, interest rate swaps, swaptions, and TIPS.

TIPS

Short for Treasury Inflation-Protected Securities; inflation-indexed products traded on the rates desk.

STIR

Short-term interest rates; a subset of money markets covering products like repo, CP, and SOFR.

MBS Desk

A desk focused on Mortgage Backed Securities, including Agency MBS, Non-Agency RMBS/CMBS, and mortgage derivatives.

Credit Desks

Desks that trade debt instruments classified by risk, including investment grade, high yield, distressed credit, bank loans, and municipal bonds.

CLO

Collateralized Loan Obligations; a specific type of structured credit product often traded on a dedicated desk.

G-10 FX

A desk focused on trading the ten most heavily used foreign exchange currencies; typically the most flow-oriented desk in FX.

Delta One

A group of equity derivatives that provide an investor with the same exposure as the underlying asset, characterized by a delta of $1$.

Cash equities

A commoditized area of equity trading involving block sales of stock, which has been largely automated by algorithms over the past decade.

HireVue

An automated first-round interview format consisting of recorded video responses to pre-set questions with limited preparation time.

Buckets

Performance ranking categories (poor-performers, good-performers, and top-performers) used to determine year-end bonuses for analysts and associates.

Analyst 1 Compensation

The typical pay range for a first-year analyst consisting of a base of $85,000$ — $90,000$ and a bonus of $25,000$ — $50,000$.

Global Macro Funds

A common exit opportunity for rates and FX traders to move to the buy-side as portfolio managers or analysts.

Execution traders

Buy-side professionals at hedge funds or pension funds responsible for buying or selling large blocks of securities at the best possible blended average price.