Hi Everyone,I am trying to get my head around understanding the various Sales & Trading outfits of the various WS institutions out there and the type of work that takes place here (in the context of the quantitative finance/software development community).The Buy-Side:Firstly, it seems to me that the "sexiest" SW Development/Quant Work/Rocket Science takes place in hedge funds (i.e. a more exotic version of the "buy side"). D. E. Shaw is a particular firm that comes to mind...typically, some of the most high-powered/supercharged/gee-whiz trading systems are developed by these folks to maximize the returns they obtain on the various positions they take. Am I on the money with this assumption or am I missing the mark somehow?Next in the food chain would by your Vanguards and Fidelitys that offer a whole suite of funds for the investing public. In addition to standard trading systems that hook them up to the "sell side" and allow them to make their trades...am I incorrect in assuming that there is some element of rocket-science that takes place here?And finally, you have your pension funds and insurance folks. Probably, the actuaries are the ones who get to do the bulk of the gee-whiz stuff in these outfits...maybe I'm missing something here?The Sell-Side:Investment Banks...these folks both make markets and do some proprietary trading/postion taking. In terms of actual trading systems work...there's probably a lot of work done here as the buy side typically deploys COTS and/or outsources a lot of this stuff. The thing I don't understand is the quantitative work and really advanced stuff that takes place in IB trading departments? Is their prop trading department really that big a deal to them...it seems market making is their bread & butter?Commercial Banks...I guess they would have a keen interest in derivatives...specifically of the credit, currency, and swap variety? Are their S&T outfits as significant as IB S&T outfits? Where do Quants & SW Developers fit into this picture?Anyhow...that's about it for now. Just hoping that anyone out there may be able to shed some light on this issue for me....Thanks.

Hi Softduck,You are not wrong exactly but you are compartmentalizing things a bit too much.Basically the sell side does everything the buyside does now. After years of advising and trading with the bs,the banks had a pretty good idea of what worked, so they set up their own groups or bought up boutiques.For example, the high frequency "stat arb" stuff done by D.E.Shaw is also done by the Hull guys at GS and an in housegroup at UBS. Further, a lot of banks have internal hedge funds that do vol arbs or convertibles. And they operate the samestrategies as Susquehanna or Citadel (where the traders came from...).Also if you can find a meaningful difference between the trading strategies of IBanks and CBanks then you arecloser to the inside than me. For example, Citi maintains a huge currency book and take positionsfar greater thanliquidity providing would lead to.

Hi filthy,Many thanks for the feedback...it certainly cleared up a few things for me.Unfortunately, it has lead to two additional questions for you (or anyone else out there brave enough to tackle this):1) Apart from the individual corporate/environmental nuances associated with each shop, is there any particular advantage/disadvantage to working for a "buy-side" operation in a sell-side firm (i.e. the Hull folks at GS) vs. doing the "same thing" in a pure buy-side firm (D. E. Shaw, Vanguard)...with respect to technology, challenges, and the overall progression of one's career?2) Also, is it correct to assume that there is basically little difference between the Sales & Trading departments of the sell-side (Investment & Commercial Banks) and the buy side (hedge funds, mutual funds, pension & insurance funds)...other than the fact that the sell-side has the additional task of making markets and providing liquidity...something that the buy side typically doesn't handle?Thanks again.

With regards to your first question. The advantages to being in a bankrevolve around capital. you can do bigger trades and hold them for longer(which makes banks a bad place to learn but a good place to playbig. to be a good trader you need to be very disciplined wrt cuttinglosses).the boutiques generally really know their niche and are probablya little more cutting edge. very good, if very specialized, training.also, you have less exposure to the rest of the world. if you are in a little options firm, current markets are great and you would be havinga great year. doing the same job in a bank exposes you to the lossesof all the other groups who won't be having as much fun.so in summary, a bank is safer but you are less likely to be a superstar.wrt your second question, the sell side does everything but the buy sideis far more specialized i.e a bank will have equity funds but will also do other stuff.also, the real "last resort" market makers are just as likely to be a boutique.the bank "market makers" are often just brokers.