DerivaQuote

Selling Derivatives (and buying them)

Dealers make money by convincing people that they need derivatives.

You can no longer just hang out the shingle and hope to gain a competitive edge.

Craig Schiffer, partner
Price Waterhouse
Risk, January, 1995

If you believe the words ‘anyone can do it' or ‘as seen on TV' or ‘with just these few tools.' chances are you're also heavily invested in mink-oil futures.

Tim Allen
Don't Stand Too Close to a Naked Man
1994, p. 33

We have a rule here that you can't go out and sell a product unless you can explain it in 10 minutes. If it takes three days, you don't have something you can sell.

Rudolph Duttweiler
Commerzbank
Risk, April, 1996, p. 32

Do not buy what somebody tries to sell you. Do not borrow what you read other people are borrowing. Do not enter into these sophisticated transactions you read about in magazines, because it may not be appropriate for you.

Roger Moss
Hong Kong Mass Transit Railway Corp.
AsiaRisk, April, 1996, p. 9

Derivatives are much more of a high-volume, low-margin production business now. Once they were a labour of love, something that was crafted. Now it's about high volumes and high efficiency. Each year, you have to run to stand still.

Rob Standing
Chase Manhattan
Risk, October, 1997, p. 28

Years earlier, as a cashier at McDonald's, I had been trained in the art of "suggestive selling." If a customer ordered a cheeseburger and fries, I knew to ask "Would you like an apple pie with that?" That strategy worked at Morgan Stanley. If a customer ordered a simple treasury bond, you asked "Would you like a leveraged derivative with that?"

Frank Partnoy
F.I.A.S.C.O.
1997, p. 130

The quants had just come up with a new deal structure that linked the U.S. government bond rate to, of all things, the Greek drachma. The point of this deal, if there was one, does not matter. What matters is that the salesman had to find investors to sell it to. And he did. Ringing up one of his best clients he talked up the merits of an instrument linked to the drachma exchange rate as if he had discovered gold. Interested but wary, the investor said 'Okay, tell me something about Greece.' Unable to think of anything about Greece on the spur of the moment, the salesmen went home that everning and saw his young daughter's school atlas lying on the living-room floor. Tearing out the page that showed Greece, he hurried into work the next morning and faxed it through to his client. Satisfied, the client bought the derivative."

Richard Thomson
Apocalypse Roulette
1998, p. 222
 
Most derivatives are sold rather than bought.
 
Robert Brooks
CFA Magazine
March/April 2004, p. 42
 
Where it can be done more efficiently in the derivatives space, then obviously employing derivative makes more sense.  But to have derivatives for their own sake makes no sense at all except to the banks that are selling them.
 
Ralph Frank
Risk, October 2005, p. 52
 

Return to DerivaQuote page

Last updated:  January 9, 2011