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A Day in the Life: Derivatives and Structured Products Analyst

Published: Aug 01, 2020

Topics: Day in the Life  

As part of an ongoing series of new Days in the Life, here's a typical 10-and-a-half-hour period in the life of a second-year analyst at Citigroup (whose daily duties, you will see, share more similarities with traders than bankers).

6:45 AM: Roll over and check my Blackberry. Since no urgent pricing requests have come in from Asia overnight (or from Brazil, which is three hours ahead this time of year), and given that today is Thursday, which my MD has designated “Binge Breakfast Day,” I squeeze in a quick trip to the gym. (With regards to the breakfast binging -- eating copious amounts of baked goods like danishes and crepes and ham and cheese croissants -- my MD and I are both health nuts, but we indulge one day a week; I'm not obliged to indulge, but it gives me a chance to build a more personal relationship with my MD, and binging once a week is innocent enough, I hope.)
7:45 AM: Get out of the shower and check my Blackberry. The coast is still clear so I get dressed and walk to work (from the gym). I walk with a newfound friend (a month ago I got in the elevator when I got home and this girl taps me on the shoulder and says, “You know we spend 20 hours within 100 feet of each other.” I had no idea who she was. Turns out she lives five doors down on my floor and works three rows over from. We’ve since become friends.)
8:15 AM: Arrive at the office. Technically I'm supposed to get in by 8, but as long I keep up with my messages and don’t have any client requests waiting, my desk doesn’t ride me about it. As I set my bag down, the phone rings and the day begins.

8:20 AM: Touch base with my trading partners on one deal, making sure everyone will be available at 10 a.m. The deal involves a supranational looking to lend money to a company in Mexico. The supranational's functional currency is US dollars so it needs to swap the loan's peso cash stream for a dollar cash stream. (The client wants to pay us US dollar interest rates and receive Mexican peso rates; in addition, they want to buy pesos so they can give the loan to the company in pesos, and sell US dollars to us.) Because these deals require booking several trades simultaneously against different trading desks within our firm (to hedge our risk) I received the deal's term sheet a few days ago. This gave me time to coordinate with my trading partners and send a few indicative quotes to keep the supranational up to date on market conditions, as well as to make sure I was in line (competitive) with other banks. Fortunately, my indicative quotes have been in line, so the client wants to go live at 10.
8:45 AM: Decide to send some follow-up emails on a new structure I'm working on that requires committee approval. Four colleagues in Brazil that pitched me the original structure are seeing a lot of demand, but despite having spent several hours with product control, risk and taxes, I'm still working with legal on the structure's enforceability.
9:45 AM: My MD asks if I'm game for the breakfast binge. I tell her I am, but that I'm going live on a trade at 10 and don’t want to risk not making it back in time. She says okay, agrees to wait, and grabs a banana to snack on in the meantime. (Given how sporadic the workload is and how difficult it can be to step away for food, my desk is like a mini concession stand.)
10:15 AM: The client finally calls and asks if I'm ready to go live. I jump on Reuters with my team and confirm that everyone's still available. My MD, looking at the time, realizes that I'm already 15 minutes overdue; she starts miming hunger pains. I realize I haven’t yet eaten a thing today. The client confirms the terms of the deal and asks me to hold; he does the same with the other parties bidding in competition. I'm not sure if there’s more bidders than usual or if I'm just exceedingly hungry, but it seems like I'm on hold for awhile.

10:17 AM: The client gets back on the line and asks for my best level. After a split-second debate over whether to shave my price to ensure the win or stick with my instinct, I stick to my guns -- despite losing the last deal. (Last week, for the same client, I went live on a similar deal that required well over an hour to model. Thinking I wasn’t in competition because of the complexity of the trade, I priced in three extra basis points of revenue for the hassle. I lost the trade by one basis point and have been beating myself up ever since.)

10:19 AM: Again I'm placed on hold.

10:21 AM: The client gets back on the line and tells me he can do it at that level. I say "done" and the client says he'll send me his term sheet for an informal confirmation.
10:25 AM: Pat myself on the back for winning a deal (and for having just worked with a senior officer of a $10 billion dollar financing arm help small emerging market companies develop). Then tell my MD it’s breakfast time and I'm buying. We both look at the clock and laugh: breakfast time has come and gone.

10:35 AM: Ask a buddy from a nearby desk to cover my phones for the next 15 minutes. My MD and I step off to a nearby bakery.
11:00 AM: We finish eating. Back at my desk, I call the lawyers to get this Brazilian structure hammered out.

12:00 PM: After 30 minutes of mental gymnastics, I've finally rearranged a few pieces of the structure in a way that legal believes will be enforceable (legal still wants to get an external opinion on the structure, but they're finally comfortable with the structure). Unfortunately, one step forward is three steps back: I now have to go back and discuss the changes with product control, risk and taxes, and convince them the economics of the deal are unchanged.
1:30 PM: Everyone seems content with the changes and now it’s just a matter of cleaning up the memo and submitting it to the committee for review. I run through my inbox and ask for some details on a new structure I'm being asked to price. While I'm waiting to hear back, I slip out for lunch.
2:00 PM: Back at my desk, I see a message from the back-office telling me they want to review the trade I closed this morning. These are never good messages to receive. Because the supranational had arranged the terms for the loan ahead of the swap, it had wanted to use a specific FX rate, which was no longer the prevailing rate. As a result, I'd compensated by inflating the interest rates they would pay to make up for the difference in the FX rate they wanted to use. (Essentially, there were two legs of the trade: one was the interest rate swap, the other was the foreign currency exchange. Since we were doing the foreign currency exchange at a rate better than where the market was, we had to make up for it by charging the client higher interest rates on the interest rate swap.) Back-office agrees that even though the rates look a bit off, the revenues line up. I'm relieved I didn’t make a booking error.
2:30 PM: Model up the new structures I received throughout the day and start sending out indicative prices. Similarly, for deals I think will go live soon, I send out some refreshed indicative quotes once the markets close for the day, making sure I stay on clients' radar.
3:30 PM: Get an email from a buddy at another firm telling me the deal he’s been working on for the last three months finally priced and he wants to grab dinner -- he has a free pass for the rest of the night. I'm pretty excited because despite having known each other 10 years and telling each other how great it would be to work in the same city after graduation, we only see each other once a month, twice if the stars line up.
3:45 PM: Having taken care of all the pricing requests, I start polishing up the memo. I reach out to my colleagues in Brazil -- where it's almost 7 p.m. -- and hope I catch one still in the office. Luckily, I get two; we split the work up three ways. Seeing how quickly things are going, I tell my MD she’ll have the memo in her hands to read before she heads home for the night. She tells me she’s heading home early. I say I like the challenge, not mentioning that I have two people helping me.
5:15 PM: Hand the memo over to my MD and realize I’ve had a pretty productive day. No reason not to celebrate my small victories at dinner as well. Check my inbox one last time to make sure I'm on top of everything and then, after my MD leaves, head for the door.


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