Podcast
Questions and Answers
What is a primary purpose of pre-trade dealer risk and compliance controls?
What is a primary purpose of pre-trade dealer risk and compliance controls?
Which statement accurately describes the difference between buy-side and sell-side firms?
Which statement accurately describes the difference between buy-side and sell-side firms?
Which of the following is NOT a responsibility of a buy-side portfolio manager?
Which of the following is NOT a responsibility of a buy-side portfolio manager?
Why might smaller buy-side firms not divide roles between portfolio managers and traders?
Why might smaller buy-side firms not divide roles between portfolio managers and traders?
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What type of orders are compliant with pre-trade dealer risk controls?
What type of orders are compliant with pre-trade dealer risk controls?
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What event highlighted potential challenges associated with high-speed trading in May 2010?
What event highlighted potential challenges associated with high-speed trading in May 2010?
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Which of the following is NOT a requirement for clients before access to Direct Electronic Access (DEA) is granted?
Which of the following is NOT a requirement for clients before access to Direct Electronic Access (DEA) is granted?
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What potential outcome is a concern for industry experts regarding incidents like the flash crash?
What potential outcome is a concern for industry experts regarding incidents like the flash crash?
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What key role do investment dealers play in ensuring compliance for DEA clients?
What key role do investment dealers play in ensuring compliance for DEA clients?
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What aspect of the DEA framework is emphasized to protect Canadian marketplaces?
What aspect of the DEA framework is emphasized to protect Canadian marketplaces?
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What is required from the custodian during the matching process of an institutional trade?
What is required from the custodian during the matching process of an institutional trade?
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How many trade-matching elements are required to clear an institutional equity trade?
How many trade-matching elements are required to clear an institutional equity trade?
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Which of the following is NOT one of the three steps taken after matching is complete?
Which of the following is NOT one of the three steps taken after matching is complete?
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Which factor contributes to the complexity of institutional trades compared to retail trades?
Which factor contributes to the complexity of institutional trades compared to retail trades?
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What is the primary purpose of the customer trade confirmation issued by the dealer?
What is the primary purpose of the customer trade confirmation issued by the dealer?
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What is a primary duty of a liability trader?
What is a primary duty of a liability trader?
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Which example illustrates proactive trading by a liability trader?
Which example illustrates proactive trading by a liability trader?
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Why might liability trades cost the firm trading capital?
Why might liability trades cost the firm trading capital?
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What factor significantly influences issuers' choice of an investment bank?
What factor significantly influences issuers' choice of an investment bank?
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Which is NOT a sector mentioned for liability traders?
Which is NOT a sector mentioned for liability traders?
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Study Notes
Institutional Client Working
- Institutional clients include various entities like mutual funds, pension funds, and corporate treasuries
- Differences between buy-side and sell-side are discussed extensively
- Sell side deals in products and services like trading, investing, research, investment advice, trade execution, and corporate finance
- Buy side is the investor, both institutional and retail
- Investment dealers are full-service, investment banking boutiques, and self-directed dealers
- Full-service dealers are involved in various aspects of securities markets
- Investment banking boutiques focus on specific sectors and companies
- Self-directed dealers focus on providing equity trading services to retail investors with small-to-medium accounts
Learning Objectives
- Differentiate sell-side and buy-side in institutional marketplace
- List the responsibilities of buy-side portfolio manager and trader
- Describe sell-side back, middle, and front office roles in equity sales and trading
- Describe equity and fixed-income sell-side revenue sources
- Explain the institutional settlement process
- Describe roles and responsibilities within an institutional investment dealer
- Contrast different buy-side investment management styles
- Define algorithmic trading, high-frequency trading, and dark pools
Content Areas
- The Sell Side and the Buy Side of the Market
- The Responsibilities of a Buy-Side Portfolio Manager and Trader
- The Organizational Structure of a Sell-Side Trading Firm
- The Revenue Sources for Sell-Side Trading Firms
- Institutional Clearing and Settlement
- Roles and Responsibilities in the Institutional Market
- Investment Styles, Guidelines, and Restrictions
- Algorithmic Trading
Key Terms
- Agency traders
- Algorithmic trading
- Analyst
- Axe Sheets
- Buy-side
- Clearing
- Coverage traders
- Dark pools
- Direct electronic access
- High-frequency trading
- Institutional clients
- Institutional salesperson
- Institutional trader
- Investment bankers
- Liability traders
- Market makers
- Order flow
- Origination
- Price spread
- Prime brokerage
- Proprietary traders
- Research associate
- Responsible designated trader
- Settlement
- Soft-dollar arrangement
- Straight-through processing
- Trade-matching elements
- Universal Market Integrity Rules
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Description
Test your knowledge on the roles and responsibilities of institutional clients, including the distinctions between buy-side and sell-side. This quiz covers core concepts such as investment dealers, full-service firms, and the functions of portfolio managers and traders in the institutional marketplace.
