Trading Desks
A trading desk is a team focused on one market or activity. Learn how bank and fund desks are organised by asset class, the roles on a desk and a typical day.
A trading desk is a team of people who trade a specific market or perform a specific trading function, such as US equities, government bonds, foreign exchange or commodities. The term comes from the physical desks on trading floors, though much of the work is now electronic and teams may be spread across cities. Banks, hedge funds, asset managers and trading firms all organise around desks, and each desk has its own traders, limits, risk and P&L.
How sell side desks are organised#
| Division | Typical desks |
|---|---|
| Equities | Cash equities, electronic trading, program trading, equity derivatives, delta one, prime brokerage |
| Fixed income, currencies and commodities (FICC) | Government bonds (rates), credit, FX, commodities, securitised products, emerging markets |
| Each desk often splits into | Sales, trading (market making), structuring and electronic trading |
FICC and equities divisions are the two main pillars of investment bank trading businesses.
Roles on a sell side desk#
| Role | Job |
|---|---|
| Sales | Builds client relationships, brings client orders and ideas to traders |
| Trader (market maker) | Prices client trades, manages the desk's inventory and risk. See Market Maker and Options Trader |
| Structurer | Designs custom products, such as structured notes |
| Electronic trading and quants | Build pricing models and algorithms. See Quant Developer and Trading Engineer |
| Strategist and desk analyst | Market commentary and trade ideas |
| Risk and middle office | Monitor limits and P&L. See Risk Analyst |
Buy side desks#
At asset managers and hedge funds, the trading desk executes the portfolio managers' decisions. Buy side traders choose brokers, algorithms and venues, manage market impact and measure execution quality. Some hedge funds have traders who also take positions directly. See Execution and Sales Trader.
A day on a market making desk#
| Time (New York) | Activity |
|---|---|
| Before the open | Read overnight news, Asia and Europe moves, check positions and risk |
| Morning meeting | Desk and sales discuss themes, client interest and economic data |
| 8:30 | Key US economic releases on many days. See Trading Economic Releases |
| 9:30 to 16:00 | Quote clients, manage inventory, hedge risk, react to news |
| Afternoon | Closing auction orders, end of day positioning. See Opening and Closing Auctions |
| After the close | P&L review, risk reports, planning for the next day |
Desk P&L and risk#
Each desk has its own P&L, calculated daily, and risk limits such as position size, VaR and stop loss limits set by the firm's risk department. Desk heads answer for both returns and risk discipline. See P&L and Performance Attribution and Risk, Position, Loss and Drawdown Limits.
The shift to electronic trading#
Many markets that once relied on phone calls, such as FX and government bonds, now trade largely electronically. Desks increasingly use algorithms to quote and hedge automatically, with traders supervising the systems and handling large or complex trades. See Algorithmic Trading Explained.
Frequently asked questions#
What is a trading desk?#
A team within a bank, fund or trading firm that trades a particular market or performs a specific trading function, with its own risk limits and P&L.
What is FICC?#
Fixed income, currencies and commodities, one of the two main trading divisions at investment banks alongside equities.
What does a buy side trading desk do?#
It executes portfolio managers' investment decisions, choosing brokers, algorithms and venues to minimise costs and market impact.
Next, explore careers in trading in Trading Careers Explained.
3 quick questions on this lesson. Get them all right to finish it.
Turn on JavaScript to take the quiz.