Market Wizard: From Wild West Trading Floor to Head of Interest at Citi: Deirdre Dunn

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  • Successful in a male-dominated industry, Deirdre Dunn is one of Wall Street’s star traders.
  • She started out on the Wild West stock exchanges in the 1990s and is now head of Citi’s tariff department.
  • Dunn wants to demystify the trade by sharing her journey, including her achievements and challenges.
  • Check out Insider’s business page for more stories.

A stack of White Castle hamburgers sat in the center of a Goldman Sachs conference table.

At one end of the table sat 21-year-old trade analyst Deirdre Dunn. At the other end was a sales analyst.

Dunn wasn’t very interested in taking part in the annual Hamburger-Essen competition, which took place day after bonus day on the trading floor, but her competitive spirit outweighed her.

“The people who attend get 10% of the total money wagered, which is a lot of money if you’re a first year analyst and are having trouble paying the rent in New York City,” said Dunn. “So I agreed.”

As in a scene from a ’90s Wall Street movie, a viewer clicked a stopwatch and for an hour Dunn and her colleague competed against each other to eat as many hamburgers as possible, placing bets on how many could be eaten individually as well as collectively.

“People came in and they got bogged down with updates on how everyone is doing,” Dunn said, referring to the equipment dealers on the floor they communicate with.

Dunn estimated that by the end of the class she had eaten about 18 hamburgers while her colleague had eaten about 16.

“Someone said afterwards, ‘This is kind of crazy, but it will probably be really good for your career,'” said Dunn. “And for years I heard from people the day they ordered White Castles like, ‘Do you remember when you ate all the hamburgers?'”

At the time, Dunn said she thought she would only be in the industry for a few years. But her love of the floor made her one of the most respected traders in the business, with stints at Goldman Sachs, Lehman Brothers and Citi in mortgage-backed securities.

Development of the trading area

Today Dunn heads Citi’s global tariff department alongside Pedro Goldbaum. The division is part of the company’s fixed income business, which had sales of $ 4.6 billion for the first quarter of this year.

Deirdre Dunn, Citi's co-head of global interest rates

Deirdre Dunn, Citi’s co-chief, global interest rates.

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The trading world has changed a lot since Dunn first stepped on the floor as a Goldman Sachs summer analyst in 1998 when she said she introduced herself to her boss on her first day, only to get a surprised reaction and the claim that he was I deleted the email that said he was getting an intern.

Analysts now enjoy world-class training experiences and generous salary packages.

In the past few months as young investment bankers and analysts have been talking about burnout in the industry, companies have been rolling out perks like free peloton bikes and pay increases to ease the burden.

There are also more women. For the first time, the Goldman Sachs campus analyst course was female-majority.

And compared to the ’90s and early 2000s, when the stock exchanges were often described with a Wild West vibe that inspired many classic books and films, there are more controls now.

Still, Dunn preferred the chaos of the floor to her quiet lab work as a chemical engineering student.

“I would say it was an intense time,” said Dunn. “It was less electronic, there was just a lot more noise and you could feel like you were part of something in a different way.”

Dunn didn’t mind the tough work environment, and she said she barely noticed the lack of other women on the floor, despite being in the minority. She just felt young, inexperienced, and hungry for improvement.

“I enjoyed the intensity at times,” said Dunn. “It felt quick, and it felt like a bunch of smart people were working together to try to get things done. And I really liked this aspect of things. “

Trade profits and hurdles

Dunn’s career path to becoming one of Wall Street’s best-known traders has not always been easy.

“You feel like you’re doing your job if you’re okay,” said Dunn. “And when you lose money, you fail. So it can be a little disproportionate to the emotional experience. “

In 2005, Dunn joined Lehman Brothers as a dealer in so-called mortgage pass-throughs. Then she started running the wider through trade counter.

A pass-through is a pool of fixed income securities where each security contains a large number of debts, such as a mortgage or car loan. It’s known as a “pass-through” because a financial intermediary collects monthly interest payments from the issuers, makes a cut, and then passes the rest on to investors.

The most common pass-through is a mortgage-backed security, which played a prominent role in the financial crisis.

Housing construction boomed in the early 2000s. Mortgage-backed securities allowed more people to buy their homes and, in turn, seemed to provide investors with a safe and consistent way to make money.

Lehman Brothers became a major player in this market. It acquired mortgage lenders in the mid-2000s to maintain its dominance in real estate. Income from the company’s capital markets division rose sharply.

Dunn said she is able to be in charge, manage risk and train the team.

“I was very proud to build the team we had and all of our accomplishments there,” said Dunn.

But just as Lehman Brothers had high points, it also came low.

In the first quarter of 2007, cracks became apparent in the US housing market as subprime mortgage defaults rose to a seven-year high. Many of these products were bundled into mortgage-backed securities with lower risk loans as demand increased.

Despite these increasing payment defaults, Lehman assured investors that the risks would be kept within limits. But Dunn said she had already managed mortgage market volatility for the bank.

It was like being on a crazy roller coaster that never ended, and it started a lot earlier than people thought, Dunn said. In August 2007, she said she would wake up in the middle of the night and not be able to sleep.

Less than a year later, the mortgage market had collapsed, forcing Lehman’s Wall Street colleague Bear Stearns to collapse. Lehman, then the fourth largest investment bank, made losses and the share price was in free fall.

Every day felt like a war, said Dunn.

The company rushed to reduce its exposure to the mortgage market, but it was too little, too late.

On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection, rendering thousands of its employees unemployed and a symbol of excess during the financial crisis.

For the first time in 10 years, Dunn had no risk to deal with, and she didn’t care if the market went up or down. It was a very strange feeling, she said.

While the crisis was difficult to navigate, it proved to be a valuable learning experience for Dunn, comparing her to the COVID-19 pandemic in terms of its human and emotional impact.

“Navigating the financial crisis in mortgage bond trading was not insignificant from his experience,” said Dunn. “It taught me very early on the importance of being adaptable in this business, which was probably only underscored last year by the fact that everyone had to adapt a lot.”

Head of the tariff department of Citi

While the financial crisis presented a significant challenge, the setback allowed Dunn to seize new opportunities. After a brief stint at Barclays, which traded in a variety of different products, she joined Citi in 2011 and took over the bank’s interest rate division in 2019.

Leading the tariff department at the moment means a lot

Zooming
Meet, said Dunn. But their ability to help the Division successfully manage the pandemic is serious business.

Dunn’s oversight helped secure Citi the coveted award for Interest Rate Derivatives House of the Year from IFR and Risk.net for 2020.

Citi maintained its position as the largest fixed income trader for the fifth year in a row, thanks in part to the strength of its tariff division, which ranked # 1 according to a survey by Greenwich Associates.

The fixed income business generated $ 17.3 billion over the course of 2020, up 34% year over year.

Running a market-leading division means becoming a risk manager rather than a risk taker, Dunn said.

Dunn’s role also includes a focus on governance, customer relationships and attitudes. One of her goals is to demystify the world of retail for a new generation entering the industry, she said.

“I don’t like to play. I don’t like all of these historical stereotypes which I think are really detrimental to talent recruiting and make people think about it because they are just a one-dimensional approach to what’s wrong,” said Dunn.

The real estate market is booming again and the markets are recovering from another crisis. And risk management is always evolving, Dunn said.

“You have to keep an eye out for new or emerging risks – in the market, in new products, new players – what do these and more mean for the performance of a trading book, the accessibility?

liquidity
and risk it, ”said Dunn.

Dunn is a long way from her time as an analyst on the trading floor. She said it was hard to look back on the intensity of that time and feel any kind of negativity or unhappiness because it was part of her career.

Unless it’s a White Castle hamburger that she hasn’t eaten anymore.



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