Purnendu Nath

The trading desks of bulge bracket investment banks and hedge funds offer a dynamic and fast-paced environment in which those with the right frame of mind can accumulate large rewards. Although the role of a “trader” is the one that springs to the minds of most people when talking about a trading environment, there are many other roles that also provide rewards much higher than other professions in the country. The most important thing that the interested candidate needs to get right is to ask (and answer honestly), “what do I want out of my job”?

The importance of a trader to the complete process of wealth accumulation for a firm varies depending on the underlying business. Increasingly, traders need to rely on analysts who work closely with them, often sitting besides them in order to develop sophisticated models to trade. In addition, roles in risk management require analytical competence, a thorough understanding of a large number of markets, as well as the ability to see the big picture. These different roles offer different risk reward profiles. Unsuccessful traders outnumber the successful ones and the rate of attrition is high (more traders below the age of 35 than above!). The rare successful ones make significantly more money for their firms than the not-so-successful ones. In contrast, risk managers grow better at their jobs over time and tend to earn larger base salaries but smaller bonuses. Similarly, in quantitative equity fund management, the analysts who develop models for identifying mis-priced securities would get paid significantly more than the trader who executes the trades.

Irrespective of the specific role, those who succeed in a trading environment tend to be those who can work long hours, in a teamwork environment, and are willing to pay attention to detail. A good understanding of the main drivers of price changes within the asset class of interest is crucial. From a technical perspective, it has become almost de rigueur for candidates looking for a role in a trading environment to be proficient with Excel spreadsheets. If you want to have an edge, add to that VBA programming. Having spoken about roles in a trading environment it is also worth bearing in mind that almost all other generic roles (e.g. accountants, computer programmers, secretarial staff) in the City have financial rewards that are greater than in other sectors of the industry. So, for example, if you think you are very good at computer networking, and you enjoy it, consider looking for a role in the City.

Although there may be an element of prejudice when selecting candidates my experience is that it is very rare these days. This is evidenced by the large number of British Asians and Indians from the sub-continent working in the top tier investment banks and hedge funds in both London and New York. Since money is colour-blind and rewards go to the best, a trading environment is in fact the best place for pure talent to shine through and get rewarded. In fact, the most profitable firms tend to be the ones with the greatest diversity. My experience is that prejudice against British Asians is so rare that it is rarely even a topic of conversation in the City these days. I hope to see the number of British Bangladeshis succeeding in the London’s financial industry growing strongly in the next ten years.