FTFM Despite a miserable showing by last year’s fashionable financial products, there remains considerable mystique around the investment banks’ proprietary trading desks.
Well-resourced and backed up as those desks are by considerable operational infrastructure and research, it has often been assumed that it is here that the banks choose to blood new products before passing them onto their clients. While this may remain true for those investment banks that are happy to run their own money using hedge fund-type strategies, the majority of new products are structured purely in response to client needs, according to Andrew Baxter, managing director of integrated model trading at HSBC. “There can be research for research’s sake, academic research, but it only leads to a product when there is market demand,” he says. “Innovation doesn’t happen in a vacuum.”
