The following is a “dispatch” I wrote for my friend Catherine Price’s e-zine, Salt, back in 2004, after having worked at Lehman Brothers on the Corporate Foreign Exchange (FX) desk for 2 years. It gives a brief sense of what it’s like to work there, and thougt you might be interested:
Originally posted in August 2004 on Saltmag:
With apologies that my reflecting pool is never still enough to see
clearly what we look like on the trading floor, I am sending you a
dispatch written in the only language that can survive the choppy
waters of short-attention-spanned corporate America — bullet points:
* My job at my investment bank (the “Firm”) is to help multinational
corporations manage their foreign currency risks
~ e.g. XYZ Corp sells electronics in Canada and manufactures them in
Japan. If the yen appreciates (as it has been doing), then XYZ’s
$-equivalent costs rise; if the Canadian dollar loses value over the
next year, then the $-value of its revenues decline.
~ Equity markets punish corporations for missing earnings estimates
for currency reasons, and volatility in income statements is damaging
to a company’s share price and financing costs
~ Hence most multinational corporations will hedge their FX exposure,
by locking in the value of a currency via various Foreign Exchange
* A Day in the Life
~ Wake up at 6 (bloody) a.m., shower, put on dark suit, eat breakfast,
walk 5 minutes to midtown office
~ Listen to 7 am morning meeting over “hoot” (PA system that works
over the trading floor phone system), where London and New York
traders, researchers and sales people give updates on economic and
political news, trading flows, rumors, technical levels and other
factors that have and could affect the value of the US dollar, the
Euro, the yen, etc.
~ Compile the notes from this call and other research publications (I
get approx. 50 market-commentary emails a day) into five to ten bullet
points, which we send out to most of our clients
~ Call clients about the currency markets, hedging methods, trade
ideas, and the global economy
~ Speak with operations staff (who actual wire the money)
~ Speak with credit staff (who ensure that our Firm limits its
exposure to potential bankruptcies by our clients)
~ Speak with bankers (to work on cross-border mergers & acquisitions,
international debt issuances, restructuring, etc.)
~ Speak with other teammates (to help them with projects, get ideas
about client-specific problems, find out about Saturday nights, etc.)
~ Speak with traders and researchers (to get updated thoughts on the markets)
~ Execute trades (ask traders for prices, compute option prices using
calculators, book trades, etc.)
~ Put together presentations
~ Deal with one-off requests (compiling client lists, writing Excel
macros, putting together models, etc.)
* The Trading Floor
~ I could reach both arms out and touch the two people sitting next to
me. There are 7 people in my row, and about 30 rows, each with 3-4
flatscreens per person, no cubicle walls and lots of noise.
~ Unlike the televised floor of the New York Stock Exchange, the FX
market is “over the counter.” There is no centralized price. Each
trader basically emails his counterparts at other banks to buy and
~ Hence the sales people (who talk to clients) surround the traders
and ask for where the market is. Only the traders know, because the
traders make the market. The value of the Euro is how much a trader
(like our traders) is willing to buy or sell it for.
~ To manage this information flow and need for communication, we each
have 4 screens, two telephone headsets, 200 phone lines (I actively
use only 6 though), a cell phone, a blackberry, eight PA lines, access
to webcasts of 5 TV channels, a Bloomberg information terminal, and
live data feeds and scrolling headlines from Reuters
~ Hence I have acquired the multitasking abilities of Theseus and the
attention span of a goldfish
~ Hence bullet points
* The Value of a Dollar
~ The interbank market deals in the millions. “Where can I buy 40
Euro?” means “forty million euros.” The million is simply implied.
~ My colleagues make between, I would guess, $60,000 and $2,000,000 a year.
~ I have seen traders make and lose hundreds of thousands of dollars
in less than a minute.
~ My job is to deeply understand the exact value of the dollar, what
it has been and what it will be.
~ I have no idea how much a dollar is worth.
* The Lifestyle
~ I personally hate shopping, talking on a cell phone, taking cabs
unnecessarily, and squandering money generally
~ But dang do I like my $10 Martinis
~ I don’t take clients out for expensive lunches or Scotch tasting
festivals that often.
~ I have spent most of my clothing money on suits, nice overcoats,
shirts, and other work accouterment
~ My weekend wardrobe is lacking desperately.
~ I don’t mind not spending money.
~ I no longer mind spending money.
* Are We Evil?
~ I came to this job, in part because I didn’t know the answer.
~ I haven’t found out.
~ The people I work with are personable, helpful, kind, generous
mentors. The gentleman who trades the Mexican peso is extremely
compassionate for Mexico. Like seriously, he cares about his homeland
~ Even though we can make thousands of dollars instantly, we work hard
to provide enough advice that saves our clients hundreds of thousands
~ People are pretty honest, I have found.
~ So while bad stuff happens, conspicuous consumption is rampant,
entire countries economies can be shattered by a rapidly devalued
currency (or over the past few years, hurt by an appreciating currency
which dampens exports), and the people who trade and speculate on the
South African rand have never been to South Africa, I don’t think any
one of us is evil. Evil implies intention and immorality. I haven’t
~ My imagination has suffered, though, as this pretty crappy bullet
point dispatch reveals.
~ But as long as I have friends who are artists, who backpack across
the middle east alone, who teach high school English, who design
games, who want to improve health care, who are working to rebuild
Iraq, who are paralegals, who are confused about their lives, who are
bankers, who are art history students, who are publishers… who cover
the breadth of possibility in a quest to find meaning and to question
whether life is a quest at all, I don’t think I can get lost.