Derivative Sales is an area of many banks and boutique investment houses. Sales teams around the world maintain relationships with investors who buy (or sell) derivatives for their own accounts or for other financial entities. Derivatives are OTC (“over the counter”) instruments which derive their payout from the performance of an underlying index or security. Some examples are plain vanilla options, exotic options, swaps and structured products (packaged investment products normally combining a bond with a derivative based payout on a stated underlying). Derivative sales can generally cover equities, fixed income, currencies and commodities; however, a salesperson will most likely not represent each asset class.
Examples of investors would be pension funds, insurance companies, private banks, family offices and hedge funds. The salesperson speaks with investors hoping to earn an order which will pay them a commission for the transaction. A trader will manage the risk of providing that derivative to a salesperson’s client. A typical derivatives salesperson will have a broad understanding of capital markets and derivatives as well as some experience in either dealing to retail, high net-worth and or institutional clients. Deal sizes can be quite large if dealing to institutions and the success can be measurable on a daily basis.