I was overwhelmed by the response of those interested in careers in the FX market so whilst I’m no expert, I’ve tried to enlist the help of some who are, namely the HR department of a major bank and the biggest online jobs agency in the FX world. I’ve had a fair bit of experience in the hedge fund space so I’ll be able to provide some angles there as well. Without going into a long history lesson on how the market has changed in the last 20 years, this is how the market is currently organized.
There are the Big Banks at the core of the FX market with 5 who dominate pricing, led by Deutsche Bank which is the dominant player. The other big players are BarCap, CitiBank, and UBS. These banks trade with each other via EBS or Reuters Dealing depending on the currency pairs, and there are also other multi-bank platforms which are used. This forms the core of the interbank market as we know it.
Each of these banks will have a spot, forwards and options dealing desks, obviously employing a large number of dealers. The market has become much more electronic over the last decade and there are much fewer dealers now needed than was once the case. Each bank will also have a large sales desk, dealing with customers like Central Banks, Smaller Banks, Hedge Funds, Retail Brokers, Asset Managers, Corporate Treasuries and High Net Worth individuals.
One area of Treasury departments which has expanded significantly is the IT departments managing the various electronic trading platforms. (Once some of my research is complete, I’ll be able to furnish more information on the types of dealers, salespeople and IT staff which the Big Banks are currently hiring).
One area which has been greatly reduced in recent years is Prop Trading, where the Big Banks allocate capital to professional traders. Worldwide changes in regulations mean that many Banks have simply closed their Prop Trading units.
On the next level down is the 2nd Tier Banks of which there might be 20 worldwide. In this number I include all of the major investment banks. These do much the same as the Big Banks, without having the large price-making departments, meaning they employ fewer dealers. They are generally very active in Prime Brokerage, meaning that they have relationships with the big Hedge Fund players, who are allowed to trade in the bank’s name. There are certainly some dealing roles across spot, forwards and options in these banks and they will also take on trainees, with most nowadays expected to be University graduates. Sales staff are also sought after, though the opportunities for beginners in the sales area are limited.
Then there are all the other banks who in essence have just become customers of the Bigger Banks (though they don’t see it like this!). They will also employ (and train) dealers and sales staff. Many now take their new crop of trainee FX staff from within their overall Trainee Programs.
Hedge Funds are big players and constantly on the lookout for trading talent. This is where Prop Traders now get their start, as opposed to investment houses or Big Banks as used to be the case. Some HFs will employ graduates, especially those with a mathematical and statistical leaning. The two avenues here are firstly, to become an employee of the HF, building trading systems and strategies which then belong to the HF; or secondly to get a role as an out-sourced Prop Trader working as part of a type of Fund-of-Funds set-up. This is one area which seems to be quite fast-growing, now that the Banks are quitting the Prop Trading space
Next I would include Retail Brokers as a potential starting point for dealers and sales staff. This is less glamorous than the interbank market but is a good way of getting started. Retail brokers are like a smaller version of second-tier banks and they employ significant numbers of dealers and particularly sales staff. I’m also digging for more info here but my initial feeling is that the entry-level requirements are lower than in the banking sector.
There are also other areas like Corporate Treasuries and Asset Managers and I hope to also have more information on these in the near future. My sense in both these areas is that they hire experienced staff only.
Part I conclusion: There are still significant opportunities within the Interbank and Retail markets for Trainees and Beginners, although the entry levels in terms of University Qualifications are now much higher. These positions are usually for Dealers, Sales staff, and IT experts. Those hoping for jobs as Prop Traders face a much more difficult path, with the Hedge Fund world now offering the best opportunities.
I’ll be back in the coming weeks with Part II, where we should have more exact information on who’s hiring who.