Sell side CDS Traders - Help me have empathy for them

[Seejay Kaye]

I think most of the comments here are pretty sound in terms of dealer’s reactions. However, there is no such thing as “etiquette” except in the sense of honesty. A market maker will be irritated if the customer is saying one thing to his salesman and doing another, but they should not get “grumpy” for any other reason. So what if a client is checking prices elsewhere – it may move the market, but that becomes the client’s problem. A market-maker is not owed a living by his clients any more than his clients should expect all the sell-side recommendations he receives to work. Too often a market-maker wants to make money without risk – i.e. make a price that he knows he can cover on the Street (also known as an uncompetitive price), but the bid/ask spread is there to recompense him for the risks he takes, so why should he always expect risk-free money? No, the client is entitled to do what he wants as is the market-maker, and no-one should get “grumpy” about it unless they have been deceived in the process. We are all grown-ups, so we should behave accordingly.

[Strange]

Well, in the end nobody owes anyone anything, but being a dick has a general tendency of catching up to you, be it on the sell side or buy side. I guess a notable exception to that rule would be a firm with very strict "execute internally" policies and even there internal clients will eventually revolt if you treat them like shit.

[granchio]

CJK: it seems your view of marketmaking is simplistic... very seldom they can cover straight away at no risk.



of course you can play it with minimum etiquette:  you are just not going to get the best service. reasons were explained in the previous posts.

[wazoo]

from my experience with brokers accross different markets: as it was perfectly said you need a good relationship with your broker.  BUT, size always matters. If you are too small, you will have to cross spreads to get done. And high yield cds can be pretty illiquid at times - contrary to what every m-m wants you to believe - , so you also might have to find the m-m who already has positions on these names to be able to trade.

[Jaxx]

cjk - i know how you feel sometimes - there are a couple of big houses that are very much like that in cds space whereas in other products they are far more competative. i think a lot of the cds m-m still have a large hangover from when it was easy to rock up and make a pile of cash and still aren't able to adapt to taking more (any) risk. The solution is to find the guys that are and deal with them well.