Financial Dealers
Conduct financial market transactions on behalf of clients.
A busy morning on the desk
You are a stockbroker at a mid sized firm, taking orders from clients while the market opens for the day. It is just after the market opens. Prices are jumping, three clients are holding on the line and your supervisor is watching the screens. A few quick judgement calls are coming your way.
Choose what you would do. Then see what happens. There are often good reasons for each choice.
I heard about this company on a podcast and everyone says it's going to be huge. Just tell me it's a good buy and I'll put in a big order right now.
Ask about her goals and what she can afford to risk, then explain what you can and cannot say
Naomi realises she knows little about the company. She starts with a small order and asks you to explain more later. You have been useful without pretending to know the future.
Tell her it sounds like a great pick, since she has clearly done her homework and the podcast host seems well informed
She places a large order on a hunch, with your approval behind it. If the price drops, she will remember who told her it was a good buy, and you could be in trouble.
Take the order quickly because your job is to execute and the line is busy
The order is placed and you move on. But she did not understand the risk, and you did not ask. Fast service is only good when the client knows what they are asking for.
Keep this quiet, but I heard from a mate that the company everyone's watching is about to announce something big this afternoon. Ring your best clients before it goes public. They'll love you for it.
Take the tip to your supervisor or compliance team and do not pass it on to anyone
It is the right move, though Reggie is unhappy and some colleagues will talk. Using information that has not been made public is serious, and compliance needs to know quickly.
Pass it to one trusted client, since you were only repeating what someone told you
You have just risked your licence and your career. Trading on information the public does not have is against the law, and passing it on counts. The consequences would last far longer than any favour.
Say you do not want to hear it, then report the conversation to compliance straight away
Reggie sulks, but compliance thanks you and handles it properly. You are not left holding something you should not have. Your reputation in this job is built on moments like this.
I have just seen a trade you placed twenty minutes ago. It looks like the wrong stock code. Tell me straight, did you make a mistake with that order?
Say you are not sure yet and check it before answering, hoping it turns out fine
It does turn out to be a mistake, and the delay has let the price move further. Checking is sensible, but it is better done in front of your supervisor and with the facts shared as you go.
Admit it at once, show exactly what happened and help fix it and record it
Ms Dang is not pleased, but the error is small and caught early. The firm deals with it properly. Owning a mistake quickly is what keeps a trading desk trustworthy.
Quietly place an offsetting trade yourself and hope the supervisor does not look closer
You have turned a small error into a cover up. When the records are checked, the extra trade stands out. Hiding a mistake is usually worse than the mistake itself.
How it went
The market settles and the desk goes quiet. You made calls under pressure, kept your distance from a tip you should not touch and owned up to a slip. Working on a trading floor means moving fast without cutting corners, and being honest even when it is awkward. Could you live with that pace?
This is a simplified, fictional situation to help you explore. It is not professional instruction or a test of your ability.
Case study: The order with one zero too many
A fictional case set in the trading desk of a fictional broking firm, with screens everywhere.
The situation
At Merrigal Securities, Jin was a stockbroker taking orders by phone. One morning a long standing client, Mr Costa, rang to sell some shares he had held for years. Jin typed the order while the client was still talking. Just before sending it, he glanced at the quantity on screen and it looked much larger than the number he had heard. The market was moving, a colleague was waiting for his phone line, and the order was one click from going out.
What they did
Jin stopped and read the order back to Mr Costa, who confirmed the real number was ten times smaller than the one on screen. A stray extra zero had slipped in while Jin typed. He corrected it, read it back again and sent it. Afterwards he told his supervisor what had nearly happened, and the desk agreed that every order would be read back to the client in full before it was sent.
How it turned out
The order went through correctly at a fair price and Mr Costa never knew how close it had been. The read back habit added a few seconds to each call. Some brokers grumbled at first, but the desk kept the rule.
What would you do?
- What makes it tempting to click send when everyone is waiting?
- Why do you think Jin told his supervisor about a mistake that never happened?
- How would you feel working in a job where a small slip can matter so much?