Kerkko Konola, Derivatives Coverage FI
5 questions and answers about the Derivatives Coverage FI desk
Hi all,
I’m Kerkko Konola, a soon-to-be 5th (and final) year student at Aalto, studying in the Systems Analysis and Operations research MSc. programme. My studies have included a mix of mathematics, programming, and finance-related courses. In my free time, I seek alpha from poker tables and betting markets. Sometimes you can find me in an AC Oulu away game in Helsinki or the local gym.
Today, I’m uncovering the secrets of the Derivatives Coverage FI desk and what it is like to work here as an FFP. As many of you might be aiming to join the programme next year, let us start with what many of you might be wondering:
Q: What qualities does a good applicant have?
Interest in the financial markets, be it equities, FX, or crypto, is a major help. Additionally, precision and a good work ethic are important. Soft skills are always a plus - I’ve been lucky to get colleagues with a similar sense of humor, which makes every day in the office considerably more enjoyable. Ultimately, however, I believe that the keys to succeeding are genuine interest in your own role and the will to learn more.
In my role, one should also have some understanding of options and the basic Greeks. In addition to interest rate swaps, we often deal with caps, floors, and swaptions. Thus, understanding how option prices change with respect to changes in time, strike etc. is important. However, knowing Itô calculus is not a necessity.
Q: What does a typical day look like?
I’ll come to work and grab a cup of tea at 08.45. I’ll make a to-do-list for the day and start calculating interest rate hedging offers to our clients (note: most of our clients use our products for hedging purposes, but speculation is possible, too). I use our in-house pricing tools to price derivatives such as swaps, caps, floors, and swaptions.
The derivatives pricing work can be split into two parts: making indicative hedging offers (90%) and making binding deals with customers via phone (10%). The former is easier; the latter is more rewarding.
After 12, I have lunch – sometimes with the other FFPs, sometimes with my colleagues from my desk. The cafeteria at Nordea Campus offers a few different options every day. The food is quite tasty, especially after a semester of eating 2,95 € student lunches. The afternoon session consists of more similar pricing work, perhaps a team meeting of some sort and some time to prepare for the deals that are to be executed tomorrow.
