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Investment Banks: Working in Operations?

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  • Investment Banks: Working in Operations?

    Quick question.
    If you were asked, why you would want to work in middle office (operations department) specifically, what would your answer be?

  • #2
    Something along the lines of.. (ignore my exact wording)

    You feel that gaining an appreciation and ground-level understanding of the core workings of the business operations is important for anyone, regardless of their position. It's very difficult to make critical decisions, without an understanding of the core day-to-day operations etc. Staff at all levels including executives and traders should all spend time in operations to gain that grass-roots understanding. This equips you to better understand the real world impact of any potential decisions or projects that you may work on in the future etc. You really see it as the basis of building a solid working knowledge of the company's inner workings.

    Also, perhaps you are simply interested in operations, as they also don't wanna hire someone who might only wanna work there for 4 weeks then quit and move on etc.

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    • #3
      I'm in my 3rd year in Operations. I've asked been asked, and have asked, this exact question in interviews. Ultimately, what makes Operations interesting (specifically, within investment banking) is that you can develop an understanding of the entire trade lifecycle, from issuance to final posting. Your average front office person doesn't really know anything that happens after execution and trade confirmation. And a lot of them don't care. If you don't care either, I suggest you don't bother applying. You'll hate it after six months and quit anyway.

      We ask specific questions to find out if someone is actually interested in Operations, or just wants to get a "foot in the door" of investment banking and will try to jump to front office in a year. Why would we hire someone like that? If this is your plan, be prepared to hide it very well. It's extremely rare for someone to go from operations to front office.

      Depending on your organization, you'll also be able to drive process change; front office is usually occupied with the sales/trading function, as they should be, leaving IT to develop and drive their change. Operations is a cost center, so we drive our own change to increase capacity, lower costs, improve service, decrease processing times, and so forth.
      Last edited by zmcnulty; 2010-06-07, 07:55 PM.

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      • #4
        Yes

        Originally posted by zmcnulty View Post
        I'm in my 3rd year in Operations. I've asked been asked, and have asked, this exact question in interviews. Ultimately, what makes Operations interesting (specifically, within investment banking) is that you can develop an understanding of the entire trade lifecycle, from issuance to final posting. Your average front office person doesn't really know anything that happens after execution and trade confirmation. And a lot of them don't care. If you don't care either, I suggest you don't bother applying. You'll hate it after six months and quit anyway.

        We ask specific questions to find out if someone is actually interested in Operations, or just wants to get a "foot in the door" of investment banking and will try to jump to front office in a year. Why would we hire someone like that? If this is your plan, be prepared to hide it very well. It's extremely rare for someone to go from operations to front office.

        Depending on your organization, you'll also be able to drive process change; front office is usually occupied with the sales/trading function, as they should be, leaving IT to develop and drive their change. Operations is a cost center, so we drive our own change to increase capacity, lower costs, improve service, decrease processing times, and so forth.
        Hello zmcnulty, your advice is very clear and useful. I appreciate when people can explain how really things work. This is my first year working in operations just after graduation and I didn't have much information about what it was before to start in this job. Now, I can tell you that it can be very profitable experience, dive in the world of operations (BE) can be very instructive and gives you many responsibilities and the opportunity to take many decisions that can really affect the business: reducing time processing, improving service, lowering costs. Finally it's a good school for professional life.

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        • #5
          Or you could say - I want to learn the process and controls that are in place so that I can figure out a way to circumvent them and perpetrate a financial fraud to my financial benefit and become famous in the process....

          http://en.wikipedia.org/wiki/Accounting_scandals

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          • #6
            Originally posted by TJrandom View Post
            Or you could say - I want to learn the process and controls that are in place so that I can figure out a way to circumvent them and perpetrate a financial fraud to my financial benefit and become famous in the process....

            http://en.wikipedia.org/wiki/Accounting_scandals
            Priceless.

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            • #7
              Good profits. Usually being traded for $5 or less than that per share over the counter (OTC) through quotation services, these penny stocks have limited liquidity and can sharply change.

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              • #8
                Don't work in ops if you can help it. Noone chooses ops as a career choice; people just end up there if they can't get anything else.

                Sorry if I am wrong but my impression is that once you start in ops, it's hard to go anywhere else (not impossible, but hard). And you are competing with your colleagues because everyone else is trying to get out too.

                However, I do repsect the work because it is important.

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                • #9
                  In my case, my career choice was primarily geographic (Japan/Tokyo) rather than industrial. So I pretty much applied to all jobs that seemed somewhat applicable to my major and experience and then chose amongst the offers I received.

                  I would therefore mostly agree with schroeder; I was not actively seeking an Ops position per se, evidenced by the fact that I didn't apply to any other banks' Ops divisions. There is little information available about Ops work, so as a result I think it's the most easily misunderstood division of investment banking. There are little, if any, new grads who are truly interested in things like settlements and process improvement. They want to do more exciting stuff like hedge CB repacks and advise clients on mergers and price options. Therefore we get a lot of applicants who are disappointed when they find out what it's really like, applicants who have ulterior motives like one day moving to front office, or applicants who compromise on their ambitions (easily justifiable since it's not exactly a great job market these days). In an interview it's easy to give an answer to the "why" question like the one I posted earlier, but truly believing it is a different story.

                  However, I will say that most of the people I work with in Ops are not trying to "get out" as they intend to keep developing their careers within Operations. Compared to similar positions in other industries, it's well-paying considering the stress levels, working hours (as far as I know), and responsibilities. It is entirely possible to have a comfortable career solely in Ops eventually making 200k a year, getting various lavish benefits, and so on. However you will obviously never see huge bonuses like S&T or IBD people, never see your name in newspapers (you hope), never really know trading or hedging strategies. It depends on your values--I would argue that overall quality of life in Ops is higher than many front office jobs, especially if you are just starting in finance.

                  In my case I am just passing through; investment banking is not my first industry to work in, and will probably not be my last. I like knowing how industries work, and for investment banking, Ops seems to be a good vantage point. It will be extremely difficult to downgrade my salary when I move on though :/
                  Last edited by zmcnulty; 2011-01-09, 08:52 AM.

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                  • #10
                    I believe if one is working in operations doing BAU type work closely related to certain business processes, then it's certainly hard to break out.

                    i.e. If one does Fixed Income processing in Back Office fund accounting systems, then it's difficult for said person to move to the Front Office trading desk for Fixed Income.

                    Typically the line you'll get by companies is that you can't do the job of Front Office if you're already in Back Office...

                    It's a load of crock IMO, because, while the person may not be an 'expert' on the trading side of fixed income, it doesn't mean they're an absolute idiot and have no clue about the industry in which they work..

                    The issue is, especially now a days, that it's totally a buyer's market out there, and companies can afford to hold out for some 'expert' in the field, because there are sooo many people looking for jobs..

                    I really dislike the 'label' that's applied to people that if they're back office, implying that they don't have the ability to learn or apply any of their knowledge working in the industry to become successful and perform adequately..

                    Also, I think it's somewhat humorous that companies expect to find an IT Development Person who is ALSO an EXPERT in Equity Trading. It certainly helps to know the business and have some related experience on the topic. However, to turn down a developer who may have worked in the Back Office side of things in an investment bank simply because they aren't a business expert... Geesh.. A developer's primary focus is NOT being an expert on the business side, but being an expert in development standards, and all things related to development in relation to the industry they're working in especially.

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                    • #11
                      Originally posted by CC_ƒŒƒ‚ƒ“ View Post
                      I believe if one is working in operations doing BAU type work closely related to certain business processes, then it's certainly hard to break out.

                      i.e. If one does Fixed Income processing in Back Office fund accounting systems, then it's difficult for said person to move to the Front Office trading desk for Fixed Income.

                      Typically the line you'll get by companies is that you can't do the job of Front Office if you're already in Back Office...

                      It's a load of crock IMO, because, while the person may not be an 'expert' on the trading side of fixed income, it doesn't mean they're an absolute idiot and have no clue about the industry in which they work..

                      The issue is, especially now a days, that it's totally a buyer's market out there, and companies can afford to hold out for some 'expert' in the field, because there are sooo many people looking for jobs..

                      I really dislike the 'label' that's applied to people that if they're back office, implying that they don't have the ability to learn or apply any of their knowledge working in the industry to become successful and perform adequately..

                      Also, I think it's somewhat humorous that companies expect to find an IT Development Person who is ALSO an EXPERT in Equity Trading. It certainly helps to know the business and have some related experience on the topic. However, to turn down a developer who may have worked in the Back Office side of things in an investment bank simply because they aren't a business expert... Geesh.. A developer's primary focus is NOT being an expert on the business side, but being an expert in development standards, and all things related to development in relation to the industry they're working in especially.
                      It will be easier for developers to make the leap from middle to Front. Once at the front if they are exposed directly to the traders making excel pricing models or ad-hoc development then they can easily learn the business and are encouraged to do it. When they do become traders you have to do the pricing yourself until they are replace. I have heard it is tough if you are not exposed to FO users at all. In which case if you want to move on; Change companies.

                      When interviewing for any position in the MO though never say "I want to be in the front office in the future". when asked how you want to progress in the future. Say

                      "I am interested in learning more about back and front office processes. I would like in the future to be more exposed to those users and understand their business fully in order to be able to streamline the workflow and efficiency of our middle office teams."
                      Last edited by Jakebullet; 2011-01-26, 10:26 AM.

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                      • #12
                        Originally posted by mushrooms View Post
                        Quick question.
                        If you were asked, why you would want to work in middle office (operations department) specifically, what would your answer be?
                        I have a friend here his name is Tokyo Joe a long time ago he worked for a bank like this (I think) you should ask him. He has a weekly podcast and you can contact him at the podcast (I guess) Hes retired now for many years but knows a lot about banks and people who work in banks http://forum.gaijinpot.com/showthrea...74#post1074674 Hope that helps

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                        • #13
                          I have a friend here too.
                          He may also have worked at a bank (I think).
                          He has done a lot of banking, and has been to a lot of different banks here, talking with a lot of bank tellers, so he knows a lot about banks and people who work in banks.
                          He will be making exciting podcasts about his banking adventures, with live podcasts of him taking numbers from the machines to wait for a teller, and also you will be able to listen to him complete various banking forms.
                          There will also be pay-per-listen episode where he pushes himself to the limit, using an ATM.

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                          • #14
                            Originally posted by steeny View Post
                            I have a friend here too.
                            He may also have worked at a bank (I think).
                            He has done a lot of banking, and has been to a lot of different banks here, talking with a lot of bank tellers, so he knows a lot about banks and people who work in banks.
                            He will be making exciting podcasts about his banking adventures, with live podcasts of him taking numbers from the machines to wait for a teller, and also you will be able to listen to him complete various banking forms.
                            There will also be pay-per-listen episode where he pushes himself to the limit, using an ATM.
                            As far as I know the OP is talking about Investment banking. I doubt there would be many ATMs or bank tellers and forms to be filled in. - well maybe a few forms

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                            • #15
                              Incoming investment traffic is vital to a company's growth. It will grant the company the strength in surpassing economic storms and the edge to cultivate its growth even more. Foreign investment is traditionally solicited, though an established company's stock will be sought after.

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