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Banks hiring for the 'closest thing you'll get to a prop desk'

The most interesting trading job in banking?

When US banks closed their proprietary trading desks under the Volcker Rule six years ago, trading careers suddenly became a whole lot more boring. Since then, trading is about little more than matching up buyers and sellers whilst taking as little risk as possible - agency trading in other words.

One area of trading is immune to the tedium, however. The Central Risk Book trading desk.

"No one will working there will thank me for saying this, but Central Risk is now as close as you can get to prop trading," said one London headhunter. "It's about quantitative systematic trading across multiple asset classes and has become very important," says Christian Robbins, a headhunter at London-based Alpha Tradestone. "Not many people know about it and fewer are capable of doing it."

Fundamentally, central risk desks monitor the positions of trading teams across a bank and try to ensure trades are placed and hedged efficiently. For anyone looking for a more detailed description of the activities of the central risk desk (or central execution desk), FT Alphaville has a long one here. Suffice to say, central risk desks are highly quantitative.

In February, HSBC recruited Mahmoud Elarbi to head its central risk desk. Elarbi previously spent six and a half years as a central risk trader at BAML and two years as a systematic trader at Nomura. BAML moved Shrijit Plappally, former head of EMEA portfolio trading, onto central risk - possibly to replace him.

Hedge funds are keen on hiring central risk traders. Moore Capital Management recruited Ben Lynch, former head of Citi's central risk desk in September 2014. This January, Lynch left for Man GLG to work on a systematic event driven fund. 

Photo credit: iNueng/iStock/Thinkstock

AUTHORSarah Butcher Global Editor
  • Gu
    11 May 2018

    this desk is secretive and hiedous. central risk book traders in my bank like to discuss:

    1)how to create trading strategies by reverse engineering client flow data

    2) how to bypass bank algorithm and model supervision process to hide their prop trading activities

    3) how to escape from best execution requirement

    4) how to reverse engineering other desk’s trading strategy

    their sneaky plan is to replace hard working human traders who give them flow now

  • Gu
    6 May 2018

    absence of regulation is actually biggest problem of central risk book in US!
    big bank's central risk book trading need be regulated!
    regulation must assure they are providing best price rather than gambling market! it is easy for them to do because they don't have transparency! they have access to client flow data (which should be prohibited) and it created unfair edge and could cause them front fronting their clients! without proper regulation, they could be cheater in finnicical markets because of inherited advantage of systematic important bank!

  • AA
    28 April 2018

    Bank's central risk book in America, is either redundant,inefficient or unprofitable. A simple matching engine is suffiencent for internalization. This desk shouldn't be allowed to trade at all.
    US equities market is much more liquid than any other country's equities market. As an alternative liquidity source, CRB has to offer a price that beat or equivalent to prevailing market quote. Thus, CRB accumulated more and more toxic flow, and eventually caused big p&l loss.

  • Pl
    18 April 2018

    Agree with Lucy. These guys get a lot of data, but what they do with the data is devise more complicated ways to lose money. Most CRB desks try to avoid trading timeframes where market microstructure is the most important factor, as that is essentially a techological arms race. Beyond those ultra-short timeframes, making money by Systematic trading is really hard unless you front run clients. The real talent for these strategies is already at systematic hedge funds earning 30% payouts of PnL.

  • Lu
    17 February 2018

    "central risk book" is a big hype. almost all central risk book heads departed last year because central risk book doesn't make money. central risk book traders get paid much lower than their peers in cash equities or electronic trading because that's what they deserved for their p&l. think they can be a cash cow through "front-running" and "reverse-engineering" their client? think again.

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