Equity Cash Trader - Catherine Taylor

Investment Banks have the most extraordinary number of jobs within them - it can be completely mind-boggling. Every time we went near one, we found a whole new department or group of people that did something we’d never heard of. This seems to be due to the immense specialisation within banks, where it can be quite possible to sit next to someone but have no idea what they do.

There are a couple of major distinctions worth highlighting. Investment Banking or ‘IBD’ tends to be the department which most people imagine when thinking about an investment bank. They are the ones doing huge M&A deals, putting in incredibly long hours (14 hours plus each day - including weekends, for months at a time - is not uncommon) and schmoozing with business leaders. Work/life balance is not easily found, but on the flipside the work you do will likely be high-profile and give you an enormous breadth of business and finance experience. This means that if you want to leave London or Investment Banking at some point you shouldn’t have a problem, as the skills gained are very transferable. We've met ex-bankers in companies ranging from renewable energy start-ups to large pharmaceuticals.

Capital Markets is where you’ll find the traders, salespeople and research analysts. They’re market-based and are the ones you see on TV shouting down phones and pacing frantically in front of five flickering computer screens. They’re monitoring market activity and reacting immediately to any changes. It’s noisier and a bit more adrenalin-fuelled than IBD. One of the big perks of Capital Markets (other than the actual job), is that the hours tend to reflect those of the market. That means early starts, with most people in the office by 6.30am, but it also means you tend to be out by six in the evening - and there is almost never weekend work. So if you’re an early riser the work/life balance is pretty good, especially compared to IBD. One limiting factor is that you’re in a highly specialised, role usually in a very specific market area, so there’s not much in the way of transferable skills. If you’re an FX institutional salesperson it’s not that easy to move into another product area, and you’re going to be tied to working in London (or another major financial centre).

Beyond these two areas you have a massive range of middle and back office functions. There’s Technology, Operations, Legal, Finance, Marketing and HR for a start. So if banking interests you then it’s definitely worth looking at the breadth of what’s on offer. The other thing that struck us about banks was just how diverse they were. Without doubt, they had the most mixed workforces we saw, with every member of a team often from a different country. While this makes for a really dynamic and interesting work environment, it does mean that when you’re applying for a job, you’re not just up against your peers in this country but across the whole world - so that application form had better stand out!

Who are you and what do you do?

Graduate Jobs In Banking and Investment

My name is Catherine Taylor and I am an Equity Cash Trader.

What attracted you to this career?

Well, a number of things initially - I think working in finance means you have a job that is constantly challenging, a job that is constantly changing. No two days are going to be the same when you work on the Equity Trading floor. I always had read the Financial Times and had had an interest in companies, had an interest in shares and these mysterious things and the graphs going up and down, and I wanted to be in the heart and the thick of it, where these trades were taking place. When you work in finance, as well, there are amazingly bright people you work with, an incredible environment, a frenetic place at times. Sometimes it can be quite stressful but I am quite a dramatic person and I like things like that. Also I like never knowing what is going to happen, because you never know if the company is going to get in trouble one day or if one company is going to buy another company one day. It will always be different and that always appealed to me, as someone with quite a short concentration span.

What does your job involve?

There are tonnes of different types of trader, and I remember before I started my job I had no idea of the different areas of investment bank, I had no idea about all the different types of trader there are. You can be a trader that trades oil, you can trade gas, you can trade Bonds, which are different types of things, or you can trade Equity, which is stocks basically, and I trade these stocks. Within cash trading, in Equities, our job is twofold – firstly, we carry out jobs that our clients want to do, so we could have a client who wants to buy $10m of Tesco, and we do that for them. We physically go into the stock market and buy the shares for them and give them a price. That is half of our job, the other half is actually investing the firm’s money ourselves - so if someone says, ‘I actually think Tesco is going to have an amazing year, I like their prospects, I like this about them, so I am going to buy myself a position in Tesco’. We have all the different sectors, we have Matt, who you met before, who trades consumer and retail stock, so names you would have heard of – Tesco, Marks and Spencer things like that, and then I trade the pharmaceutical stocks - GlaxoSmithKline, AstraZeneca, Roche, you may have heard of them - and it is divided up across the floor. You have the tech sector, you have oils and gas and you have financials, and within those different sectors we trade all the stocks in the sectors.

How does a trade work?

So let’s say you are a client and I'm a trader - and I am going to use Tesco as an example again because it is a big stock with a name everyone knows - so you are a client and you want to sell $10m, you would call up the Sales people and you would say, ‘I want to sell $10m dollars of Tesco’. Now by virtue of the fact that you are selling Tesco and you want to sell it to me, I will end up owning those shares of Tesco because they have to go someone, so you say ‘I want to sell $10m dollars of Tesco’, I would give you a price on that $10m portion of the Tesco share. Because I would end up owning those shares, I have to work out if I am at risk, because I own Tesco shares and the Tesco shares could go down, so this is called being 'at risk' it is a terminology that is used in the industry, you are on risk. So let's say you sold me $10m dollars of shares of Tesco, I give you a price depending on where the market was trading, so then I would have to get out of that position in Tesco. It will be the wrong thing for me to do to just panic and sell the whole thing in the market because I would move the share price down, so you have to carefully work out a risk. So when you are a trader, it is important to understand risk and not to panic - because let's say if you sold me $10m dollars of Tesco, Tesco trades billions and billions of dollars a day, it is no problem to get rid of $10m of Tesco. If you sold me $10m of a tiny company, that really didn't trade, let's say it traded $1m dollars a day, it would take me 10 days to get out of this risk that I owned, so I would have to price up very differently. So the price you give to your client - and remember you can't upset your client, you can't give them a ridiculous price - the price you give your client has to depend on where they trade on the market, how liquid they are, i.e. how many they trade a day, and the size of the risk you are taking on. Pricing $10m is not a problem - pricing a billion dollars of Tesco, I would have to think and ask a lot of people about what they think and what their view is on that. So you have to understand stock and you have to understand risk and you have to know - well you will never know which way the market is going to move, but you have a feeling.  If we had all of a sudden on our Bloomberg flashing up, flashing up 'Tesco is going to profit warn' and we own $10m of stock, we would be in trouble because the Tesco share price would plummet and we would be owning $10m of stock. So if that had happened and then you came along to me and said: ‘Can I sell you $10m dollars of Tesco?’ I would say: ‘No, you can’t, I'm afraid they are just profit warns, share prices are going to collapse and so you wouldn't trade’. So the end game of being a trader, and what we all really want to do, is to what we call cross up stock. So let’s go back to our example - you are selling Tesco, you have sold me $10m. All of a sudden, I have advertised to the world that I am a seller of Tesco because I own it, and I have another client, over here saying ‘I would like to buy $10m of Tesco’. Perfect, I haven't even gone into the market, I have crossed up the stock, no risk to me, you are both happy, thrilled that I had such liquidity naturally sitting here. So the end game and the biggest buzz when you are a trader is to cross up big blocks of stock, because everyone is happy. You haven't cost any money because you costed it up, your client sold as much as they wanted to without going to market, you have bought as much as you wanted to without going into market, so that is the real thrill, when that happens it is really great thing.

Describe the process of your work?

At the very start of things is the research report. You have the research report department and they sit in a different place to us, legally they have to sit in a different place, and they will be writing one of their reports. Let's take Glaxo, one of the stocks I cover. Our Research Analyst will make his discounted cash flow, look at the accounts of Glaxo, look at their potential going forward, he will come up with a price he thinks Glaxo shares should be trading at. Then he will look at the price they are at in the market and if they are different he will say ‘You have to buy this stock’ or he will say ‘You have to sell this stock’. So the Research Analyst will write this all up and you can sometimes get reports that are big and sometimes just a few pages, and he will say ‘I’ve done my research on Glaxo, you should really buy this stock’. Now the Research Analyst skills are very different to the Sales person, so he will then essentially hand over the ropes, when he’s gone public with his research report, he will hand over his ropes to the sales force, the sales force get on the phone and they tell all their clients “guys we have got this report on Glaxo, we absolutely love it, you have got to buy it”. So that is the Sales person so you can see the differences in the role. Research is slower paced, doing the writing, doing the sums; Sales are on the phone, the most important thing for them is the relationship - long-term relationships these guys have, do they trust the Sales person - and they are basically disseminating the information that Research Analyst has given them. Then if the client says ‘This Sales person is good, this Analyst is good, I am going to buy Glaxo shares’, we take commission. In the same way that every other commission industry works, we take commission from the shares that we trade for them. So it ends with the Trader - we price the risk. There are different ways we can price it, some clients won't event ask for a price, they will just say ‘I want to sell $10m of Glaxo, you can work it over the day’ or they won’t necessarily be so aggressive as to say ‘I need a price here and now’. So that is where it all ends up with the Traders.

What do you do on a typical day?

The one slightly negative thing about the job is that it is incredibly early starts - so I am at my desk by six or six-fifteen. The first hour and a half of the day are really the most important for me, because it’s then that you get to your desk and you turn on all your screens. I have four screens in front of me, and our job in the first hour and a half of the day is to filter all of the news that has come through overnight in the names that you care about - I only trade pharmaceutical and chemical stocks so I will have these amazing news wires, Bloomberg and Reuters, filtered to give just me news on my stocks, same as the other teams. So I look at what has happened overnight, what has happened in the US overnight, what is happening in Asia, what is happening in my sector, because I’ve got to have a view when the market opens at eight a.m. I’ve got to have a feel of which stocks might be flying through the roof, I’ve got to kind of know which stocks might be going down and have a feel for where the market might go, because as a Trader that is pretty much my job. And you have to be able to field questions from around the floor because the rest of the floor will rely on you – because Generalist Sales have to cover every single stock as Sales Traders, they might not know why Glaxo is up 10% in one day, so they will come to me on a microphone and they will say ‘What is happening with this, what is happening with that?’ and as a Trader you have to be able to give them an answer, it is unacceptable for you to say, ‘I'm not really sure, sorry’. So we get in and have this manic hour and half, it is a fun time because the market is not open, so it is not the same kind of pace.

Then we have a meeting every day at five past seven and in that meeting we’ll talk to each other about what is happening in the different sectors, then we have an overview across the whole market on what might be the big stories of that day, you know, what we might hear, has anyone got a specific view on this or that. So then the markets open at eight and then we are trading generally until four-thirty and during that time we will be watching our position, we will be trading or speaking with clients, reading research, having ideas and discussions with people. We don't so much get on the phone and talk to clients as the Sales Traders - our job is to provide them with information on emails, on chat pages we have - but our job is to stay focused on the market, stay focused on our stocks and trade for clients and give them best execution. So then the markets close at four-thirty and really after that, the joyous thing about being a Trader is that we never really have to work into the night, because once the markets are closed the job is done. You have tidying up to do, closing up to do and I would say I leave around five-fifteen to five-thirty every day. That is what I massively love about the job, my hours are fixed but I never know what is going to happen in those hours, it is every single day and it is a cliché and you will hear it 10,000 times, but every day is a new day and if you had the most terrible day and you have lost money or clients have been unhappy with something, you come in the next day and it is a fresh page, you know? It is certainly an exciting place to work - you feel like you are in the engine room of the bank, I do anyway.

What are the best bits about your job?

Well, I love knowing about the companies, because the way it is divided up here is great, because it is all sector-specific so you get to really know your companies. I love being the direct interface between the markets - when I push a button, I buy or sell a share. If I am buying a lot of shares, I will move the share price up and I can see on a graph of the share price, the movement up is me doing that. I love the fact that I am totally in control of the profit and loss that I would make, I can see it happen right in front of my eyes. And I love being the point of contact with certain stocks, I love talking to the Sales Traders, I love the energy about the trading floor - so there is a lot that I like about the job.

What are the worst bits about your job?

The five-fifteen starts - you get used to them, they are pretty gritty sometimes - but then I think, myself, I used to work in a totally separate industry and I got up at seven-thirty and still found that a pain to get up at seven-thirty, and I would find it a bore. I have to go to bed a little bit earlier than what I used to, but I really don't find that such a problem, because at the weekends I can still go out. I can still go out occasionally - it might just mean I am a little tired the next day. But I would say the bad thing is the five-fifteen mornings.

What has been your greatest achievement?

I would say I was slightly different to everyone else at my age who joined the firm because I didn't come through the analyst programme. I came as what is called a lateral hire from another profession – I’d worked for a shipping company. No, I didn't know very much about the financial industry when I joined; I did a lot of work and a lot of preparation for my interviews here. At that time, there had been girls many years previously, but when I joined there were no other female traders on the trading floor. It was a lot of work to get my head around interest rates and economics and stock markets and stuff like that, but to be offered a job here as a girl was amazing, so that is probably my most proud moment.

Any regrets?

I think if I was to have done anything differently I would definitely have done an internship because at least then - I liked the fact that I worked in shipping before, I tried something else, you know I tried it out and it was a fun two years and a different experience - however, without the benefit of an internship here, it was difficult for me to know much about it, and much harder for me to get the job than if I had done one, because when you have done an internship they know you and they know your name and you can see what you like. When I joined it took me a very long time to understand, when people referred to bankers, I would think aren't we all bankers, but when you work in the industry you understand that bankers means investment bankers who do a totally different job. So things like that, I didn't know the terminology, and it took a lot of time, there was a big transition time for me in my first six months on the job were quite tough. Had I done an internship or some work experience, I would have been in a much better place and could have sort of hit the ground running when I joined. But yes, I think my regret is that I didn't do any internships - I thought at university I would deal with the career afterwards.

What is the pay like and are there any perks?

We work hard and we get rewarded for working hard. We get health care, I have a pension plan - that is optional but I choose to have one - and we get a performance-related bonus that varies every year, but it is definitely competitive.

How long is a working day and do you have to work out of hours?

It’s tricky because while my hours are fixed - occasionally, we might have to stay until six or seven but that is very rare. We never have to work at weekends, which is great and I treasure that because some friends of mine who work in different industries have some weekends eaten into. Regarding a BlackBerry, when you take positions, when you are investing in a company, really you should care about what its doing when you are not at work, so while we are not in the office, occasionally I will find myself looking at the computer at home, I don’t have a BlackBerry, but I look at what is happening in the market or what stories are hitting. I think the more senior you get the bigger positions you take, the more responsibilities you get, you do have a BlackBerry. It is certainly not the cumbersome load that it is in other professions. So it feel that, on balance, I know we get in early, but we have such great free time aside of our working day that if you measure it up, we don’t work any more than a lot of other people.

Is there much in the way of travel?

Well it does depend - strictly the Traders’ job is on the desk, we won’t travel as much as, say, people in Research, and perhaps not even as much as people in Sales. My boss, for example is going to Germany next week to see clients, so he is travelling; but it is not that common to travel and another reason why I chose the job because I travelled quite a lot with my old job, and found I was on planes a lot of the time, out of the country a lot, and missed my friends and family. So I wanted a job where I would be here most of the time - but there are opportunities when you work for a global firm, if you wanted to work in, say, New York or something like that, there is certainly that option, they are available to you. You have to got through the right channels, but working for a global firm helps. But in terms of week-to-week and month-to-month travel, a Trader’s job is pretty much based on the trading.

Do you have to be based anywhere in particular?

I trade all the European stocks, so I trade England, Germany, France, Italy and Switzerland. So long as you have the right technology, you could be a Trader in any of those countries. We have US Traders that do exactly the same thing with American stocks. So obviously you have to have the right infrastructure and the right team around you, but you can be a Trader in other places.

What is the working environment like?

So, to describe the actual physical environment - it’s like a room the size of a football pitch, it feels like that size, with rows of tables, people standing up, people shouting or making noises, people on the phone. It's a lively place. It also, the first time you go on to in, can be daunting and terrifying because there are a disproportionate high number of men, but that is changing, and even since I have been here, in two years, the number of girls has picked up and there is more of a female presence on the floor which is great. However, working with guys, I have a great team and I am not entirely sure that I make a distinction between men and women, you know - I love the team I work with, we are very close - if I'm in trouble, if I need help, if I am being asked to price a difficult trade - I can call over to any one of the guys and they will come over and help. I think the most important thing is that you enjoy working with them, because ultimately we are here a long time, and you need to get on with who you’re working with. We get on very well as a team. Yes, there are more guys but I don’t have any problems with it at all, and I don’t even notice it - and you are never made to feel any different because you are a girl. At any point and any stage, you are given the same opportunities, you are told off in the same way - so I think maybe for the first two days I was aware of the fact that I was a girl but other than that it’s just a quality team that we have. And it is fun, really fun. They have a brilliant sense of humour, some of the guys – they’ve been on the trading floor since the days when it was an open outcry and you used to have to literally stand and shout at each other, and they have got some funny stories, funny jokes, and it is really good fun working there.

How did you get into your job?

I am slightly different from everybody else, although there is no prescribed science. I studied chemistry at Oxford, I got a 2:1 in my main degree and I did a Masters also. I hadn’t really thought about going into finance when I did my degree, I always thought I would end up in the sciences. I didn’t, and as it worked out I did end up here. I don’t think it matters what degree you did, and I really mean that - my boyfriend works at a competitor bank and he did history at university. And depending on the area you are in, obviously your degree requirement will change. You have to be good - you probably don’t have to have a 2:1 - but it helps because it shows people you are smart, dedicated and you can focus on work. I think, as in every job, there are tonnes of different things you can do here. If you are going to be a Quantitative Analyst that means you are going to be using numbers a lot, you will be using formulas a lot, so perhaps a more mathematical degree would help. If you are going to be in Sales, it might help you if you love speaking; if you are going to be in Research it might help is if you love writing, so an English degree might be more beneficial. There is no prescribed science, you can’t rule anything else out; there is absolutely no degree that you could do that would work against you, within reason obviously, if you are applying for a job. The fact that I was numerate, because I studied maths at A-level, really helps - and I can’t recommend how much maths helps across life in every way - but I was numerate, so if someone asked me about the percentage change in something I could do it, but on a day-to-day basis I don’t need to use that much maths. So I think it doesn’t matter what you do as long as you do it quite well and as long as you really want to work in the finance sector, and you have done a bit of work around the background to it. Economics helps - it would be impossible to say it doesn’t, if you’ve done economics you will have an innate understanding, you can hit the ground running, or you know a bit about the drivers of the industry - but there is nothing you can’t pick up. In terms of how I got my job, I was slightly different to everyone else because I didn’t join the Analyst Programme. When you join the Analyst Programme you follow a structured path and a very structured training programme, which is the best way to join an investment bank. I was incredibly lucky and by a twist of fate my old company was relocating to New York - I was literally having a drink with a friend of mine and they were looking for another graduate or someone to fill a graduate hole and I was looking for a job, he was looking for someone to come and work for him, so he said ‘Would you like to interview?’. I spent a lot of time preparing for these interviews because they are quite tough and I knew I wouldn’t necessarily know at that time what the UK interest rates were and they might have asked, so I did some research and had the interviews, a number of interviews and then got the job. So, a slightly different process to most people of my age.

What's the application process like?

Obviously the best thing is to do an internship, because then you are more likely to be invited back for interview, for the Analyst Programme. I know you have to fill in quite an intense online application form that will ask quite a lot of questions, and if you can refer to an internship or some work experience that is great. I think there are thousands of application forms that come in; I’m not sure of the ratio, but it is quite hard to get through that first screening process. And then you get through to interview stage and you will be interviewed by maybe six, seven, eight or nine people, and then if you are successful at interviews you will be offered a job. I think that is how it works for the Analysts here.

What are the key skills required for your job?

The great thing about banking - and that is across the whole industry - is that there is literally something for everyone, no one can rule themselves out of working in a bank. As long as I have been here, I have realised I’m quite loud, I like being in a hectic place, I quite like shouting, I am a bit dramatic and I love being in the buzz of things. But then if you go into Research, it is very quiet; you can focus on your work, you write a lot, you can spend time getting into a lot of detail about your companies and you sit quietly. So in terms of different character types, perhaps people who didn’t like it to be so loud and frenetic, there is Research. There’s a place for anyone. And then I think in terms of what makes a good Trader, you have to understand risk, if that makes sense, you have to be quite strong. You have clients who will want to push you for a price and you will have to say ‘No, I am not happy working with you at that price’. So you have to be quite tough and you have to be quite strong, you have to be curious, you have to be inquisitive and overall have a passion for what you are doing because it is just not fun if you don’t enjoy it. You have to be analytical, that would be the skill you would need for anything you work on in an investment bank, to be analytical, because you have got to be questioning everything, and if everyone else is saying ‘Buy stock!’ you have to think ‘Should I do that or should I not?’ So you have to be quite like a detective sometimes, and everything you hear you have to questioning and query. Like I say, there are different personality traits and skill traits for every single job in a bank. The Quantitatives who write mathematical models and do everything in numbers, they are predominately numerate people and don’t necessarily need to have to have people skills, they won’t get on the phone to too many clients - some people love that. I don’t speak on the phone to as many clients as the Sales people, and I am quite happy doing that because I prefer to be in the thick of things, getting involved - but there are different skills for every different job.

What's your top tip for breaking into your industry?

Do an internship, do some work experience, so some homework - if you write your application form, it is clear within a nanosecond if you know really what you want to do, and you can differentiate so many people from these application forms. If you want to be in finance, try and read the Financial Times to see what interests you, because there’s tonnes of stuff out there - you could be interested in currencies and how they move, and then you go to FX department and you would be an FX trader or an FX analyst. So my tip would probably be do the internship and then talk to as many people as you can in the industry, find out what they like about it, what they don’t like about it, ask ‘Can I see myself doing that?’, find out if you are similar to people that work in it. I can't stress enough how important it is that you do some work on the background of it, because we see so many people, and you say to them ‘Why do you want to be in finance?, and they’re not really sure, they don’t know. It is competitive for the Analysts to get in, but the ones who get here are the ones from day one who have made it clear they really want it and they are not doing it for any reason other than that they want to work in finance. So that is always clear from the beginning of the application process.

What's the career progress and how quickly can you move up the career ladder?

Well, like I say, I am not on the programme, so my path will be slightly different, but the set programme is two or three years as an Analyst, and there your role is a slightly more junior role. And then you go though to Associate, which I believe is two years, with very much more responsibility; you are given responsibility from day one, but as an Associate you have much more responsibility and that is the next step. Then you go on to VP, which is Vice-President, following that it is Senior Vice-President and then Managing Director. And obviously to get to Managing Director is a huge privilege, it is an honour, your name goes into the financial press. It is a great honour to get that far and you are given a team to manage. I am not really sure the typical time to do that but I imagine more than 10 years, because I don’t think the time you are Vice-President and Senior Vice-President is set in stone, and you could be those for a number of years, or half a year if you are absolutely amazing. If you are good, you will be given responsibility and you will be given people to manage and you will be given people to show the ropes, so if you are good and you keep pushing and you keep driving, you could make it to the top much quicker than someone who just sat in their chair and hopes the world will go past them.

Is there scope for movement during or after this career?

I think the process of analysing things, analysing companies, learning about companies, speaking to your research people, reading research; these analytical skills I think would be transferable anywhere. You’ve got to have the confidence to stand up and shout across the room sometimes and at first it was terrifying, but these confidence skills just help so much, and I can’t think of anywhere where it would be detrimental. You also get confidence, you get analytical skills and you get people skills - you learn how to communicate with people and in certain cases manage people, so in terms of actually being a Trader, you can transfer to different types of Traders. But it is more the discipline it teaches you that would be transferable.

What are the industry resources that someone interested in joining must know about?

The best, easiest, cheapest thing to do is to read the Financial Times. It is a brilliant newspaper, out every day and really is the bread and butter of our industry in terms of publications. It would be odd to find someone who says they don’t read the Financial Times, because not only is it a quality newspaper, it gives information about companies’ stocks and their currencies all over the world. So if you read that it packages up for you, every day, what is important and you can follow stories. Even if you are at school or university, and you don’t know a lot of the names, there might be a story on Cadbury, and you would think, ‘Oh, someone is interested in buying Cadbury, maybe I will follow this story’ and the next day they will have the latest update of the Cadbury story. So if you were interviewed you might be asked ‘Have you been following anything recently? It doesn’t have to be anything complicated, but you could say, ‘I've been following this story about someone being interested in buying Cadbury’. That is just an example - I have absolutely no idea about what is going on about it! I think it is a really easy and really useful thing to be involved in, just to get the Financial Times, I would recommend that.

If you weren't in this career, what would you be doing?

I don’t really know - in my heart I think I would always have gravitated here, because I loved what I did before - I worked for a shipping company - but there was something unsatisfying about it because I was interested in the stock market. And I could see it happening from afar and I would think ‘What is actually going on there?’ So I would probably feel unsatisfied if I were doing anything else, and I don’t really know what else I would do. Given I did chemistry at university, perhaps something in the sciences - I have to say I found research a bit boring so I would probably leave that.