SalesEasy

5 min read · 887 words

What the seat actually does

Sales sits between a trading desk and the people who want to use what it quotes. In one direction it carries the market outward — what moved, what is being shown, which idea the desk thinks is worth a conversation. In the other it carries the client inward: what they are trying to do, what constraint they are under, and how much of it the desk is allowed to know.

The product is not an instrument, it is a relationship with an inventory attached. A client can trade the same swap at four banks. What they cannot get at four banks is somebody who already knows their mandate, their board's tolerance and which of the last three ideas went badly.

• Coverage — a named list of clients, and everything that reaches them goes through this seat.
• The idea — a trade that solves a problem the client has, usually built out of what the desk already holds or wants to hold.
• The price — asked of the trader, shown to the client, and defended in both directions.
• The aftermath — a trade that goes wrong is this seat's conversation, not the trader's.

A day, and where it goes

• Before the open — reading what happened overnight and deciding which two clients it actually matters to. A morning note sent to everybody is read by nobody.
• The open — the flow that was always coming: rolls, maturities, an index rebalance, a coupon that has to be reinvested.
• The middle — the part that is not scheduled. A client asks for a price in something the desk does not currently hold, and the next twenty minutes decide whether there is a trade.
• The close — confirmations, and the one call to the client whose trade did not work.

The unglamorous half is the largest: most of what a sales seat does is make sure a client can do the ordinary thing quickly and without surprises. The interesting trade arrives perhaps twice a month and is paid for by the hundred routine ones around it.

What it is measured on

• Revenue credited to the seat, which is not the same as profit on the trade: it is a share of the spread the desk earned, allocated by a rule the desk and the seat both argue about.
• Share of a client's business — the number that survives a bad quarter. A desk that is third on a client's list gets shown the trades nobody else wanted.
• Whether the flow is worth having. A client who only ever trades when they are right costs the desk money on every ticket, and the seat is the one who knows that before the position does.
• Nothing that looks like a quota per product. A seat paid for selling one instrument will sell that instrument, which is the mechanism behind most mis-selling this site has a case study about.

What it touches on this site

A sales seat is defined by its asset class more than by its title, so the market pages are the subject matter and this page is only the seat.

• What is quoted — the eleven markets in the atlas, and in particular rates derivatives, credit and FX, where the client conversation is about a hedge rather than a view.
• Where the money in the trade is — every market page answers "where the spread is, and who earns it", which is the seat's own economics read from the other side.
• What a client is allowed to be sold — reading a KID and what a product actually costs.
• The next seat along — trading prices it and structuring builds it when the answer is that nothing off the shelf fits.

How it goes wrong

• Selling the desk's position rather than the client's problem. The desk is long something it would rather not be, and the idea of the day is suddenly that instrument. This is the oldest conflict on a trading floor and the reason for most of the rules around the seat.
• Explaining a payoff and not the tail. An autocallable pays a coupon most quarters and is described by what it does most quarters.
• Suitability as paperwork. A signature saying a client is sophisticated is not the same as a client who understood the second derivative.
• Information travelling the wrong way. What one client is about to do is not the desk's to trade on, and the wall between the two is a rule rather than a preference.

Concepts to master

• Bid-offer is the fee, and it is inside the price. A client who asks what the trade costs is usually told nothing, because the cost was never quoted separately. See what a product actually costs.
• Axe — the desk's own preference to buy or sell a thing. Knowing the axe is most of what makes a price good, and disclosing it is a judgement rather than a rule.
• Best execution is a process, not an outcome. It is demonstrated by what was compared before the trade, not by where the price ended up afterwards.
• The client's constraint is the trade. A pension fund matching a liability and a fund manager expressing a view will do opposite things with the same instrument, and both are right.