Moving from back office or middle office to front office

By , CEO of Volcube.

Front office trading jobs have never been in over-supply. And with investment banks scaling back their proprietary trading activity after 2008, landing a front office trading job has rarely been harder. Traditionally, if you didn’t secure a junior trading role via say the graduate recruitment scheme, another route to the front was the back or middle office. Is this still a viable route? Whilst there will always be exceptions, in general it appears that making the transition from back/middle office to the front desk has become a lot harder in recent years. Why so? After all, lots of successful traders have started in the back/middle office where they learn the basic mechanics of financial markets from the ground up. The problem for the aspiring trader in the back office is the number of high profile disaster figures that have emerged from their ranks. In short, rogue traders.

Whenever a trader has gone rogue, it has usually only been possible because of their in-depth knowledge of the bank’s internal accounting and trade processing systems. The kind of knowledge that can only be acquired by serious time spent in the back or middle offices. From Nick Leeson through to Jerome Kerviel, traders who have been accused of going rogue, not only know where the bodies are buried; they know where to bury them.

How to get to the front office

There are still several ways to get out of the back office or middle office into a trading role. It  might not always be as straight forward as in years gone by, but anything is still possible with dedication and the right approach.

  • Broaden your thinking. There is more than one front office. You may need to move outside the firm before you can progress forwards.
  • Making the move often involves a sacrifice. Investment banks pay support staff relatively good money. Trade assistant roles in small trading firms can be a great way to get on to a trading desks, but the remuneration initially may be considerably lower. Ask yourself if this is a move you are prepared to make.
  • Continue to educate yourself about trading. This is essential. Read books about trading. Use an online trading simulator or set up a paper-trading account to get some kind of first-hand experience.
  • Network. Learn to network effectively.
  • Add value to the front desk. Back/middle office staff only come in two flavours as far as the front office is concerned. Helper or hindrance. Make sure you are making their lives better. Eliminate mistakes by you and your team. If you can think of a way to reduce the costs the front desk face, that is bound to be seen as valuable. If you spot an error (say made by a counter-party to a trade at another bank) that would have cost money, make sure the front desk are aware that you have saved the day.
  • Realise there are several routes and several destinations. On a typical front desk will be traders, managers, sales traders, desk assistants as well as programmers, quants, structurers, interns etc. Each have different skillsets and backgrounds. You may have a future in any of these roles and there are different ways to get into each line. Quants will have MFEs or PhDs in maths. Part-time/distance learning is possible. Banks will often hire a desk ‘wholesale’ from a smaller independent brokerage or prop trading fund. These firms are often full of traders or brokers who avoided the bank graduate recruitment schemes (deliberately or otherwise). One thing to remember is that banks don’t view experienced professionals as they do graduate recruits. Many successful traders and brokers who end up on the front desk having been hired as experienced professionals would never have made the graduate scheme given their education/grades. The point is that once you have experience, your results as a trader (or member of a trading desk) dwarf everything. If you are a proven trader or a great broker, your education becomes virtually irrelevant.

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Volcube : options training technology

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BA Economics, Northwestern University

& Trainee derivatives trader in Chicago

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