Day in the Life: Steve Munday, structured credit trainee
06:45 Alarm goes off. As a trading group we have to be on the desk early, before the markets open, which also gives us a chance to prepare before we speak to clients about possible trades.
07:15 A quick shower and dress later and I am on my way to our offices in Canary Wharf. Luckily I live very close, so it is either three stops on the tube or 20 minutes walk in the summer.
07:45 Cup of tea and bowl of cereal in hand, my first hour or so is spent checking work from yesterday, reading through our daily summary on last night's closing prices, and looking through significant news which might affect the markets.
08:30 The real day begins with a research task. One of the traders has asked me to locate bond identification numbers for a list of company names he has in a portfolio from which a synthetic collateralised debt obligation (CDO) will be priced and traded. A CDO provides a way of insuring against the risk that a portfolio of companies might default on their repayments of debt.
The identification numbers are found from old trade legal documents and by liaising with our bond traders and brokers.
10:30 A quiet period on the desk gives me an opportunity to read. The traders are giving me extra responsibility for administrating some of their swaps trades. I therefore need to understand how they work properly, but this shouldn't take too long: we studied swaps on our graduate training program in New York last summer.
12:00 One of our colleagues in sales has an Asian client who would like a price on a AA Rated Single Tranche CDO, with our own choice of underlying companies. I work with one of the senior traders as he chooses the most suitable names, to obtain the spread and rating the client is looking for.
13:00 We take a break from the portfolio to grab a sandwich and get back on the desk for our global trading conference call, where our senior traders talk about movements in their sectors and their strategies for the near future. This is a great way of finding out what the flows are globally, and understanding what factors are moving the markets.
14:30 The portfolio is finally chosen, and it is given to me to price. Using Ratings and Bank of America's proprietary pricing models, I find our portfolio doesn't quite give the returns and rating the client is looking for. I send it back to the senior trader for amendment.
15:30 Using the optimised portfolio I price up the tranche again, and this time we get to the levels we are looking for. I forward my work to the trader for final check, who ultimately passes this to our salesperson and client. We wait to hear feedback.
17:30 Part of my role involves tracking some European benchmark indices, which contain the most liquid companies in the credit default swap market. These are Iboxx and Trac-x. Using mathematical models I can infer how correlated companies in the indices are, so that we know how likely it is that if one company defaults another will follow, and so on.
These correlations are sent to all our structured credit traders, as they are useful in pricing up trades that reference some or all of these names.
18:30 As the markets close for the day and groups on the floor start to leave, it is the best time for the traders in my group to work on pricing and structuring of deals in the pipeline. For me, it is a great opportunity to shadow my seniors and assist when I can. I rarely leave before 7:00pm, as this is the best time to for me to learn about the products we trade, and how to price them up.
20:00 I try to get out to the gym a couple of times a week and other nights I like meeting up with friends around the City for dinner or drinks. Fridays are best because a hangover doesn't matter so much!
