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I'm interested in working within FX in an investment bank, but I noticed that they listed Currencies and FX separately under Fixed Income, so I'm wondering if they actually refer to different things. Can someone who has knowledge of this shed some light on this issue?

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    Can you point to this differentiation on the web somewhere? Seems very odd. Oct 18 '11 at 16:24
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I'm not sure the exact difference because I don't know which bank you are referring to. But FX typically deals with the spot exchange rate which is delivery of a particular currency (with respect to another currency) usually 2 days from the time of entering the contract. This is the kind of transactions that currency day traders speculate on. And also what the exchange rate you pay when you travel abroad is based on (usually calculated daily by local banking authorities).

Currency futures are contracts that calculate the future value of a particular currency at a longer period usually consisting of an exchange rate with respect to the US Dollar. These are typically used to hedge future cash flows by "locking in" an exchange rate similar to how other futures contracts operate.

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  • So I'd just like to point out how immature and lame it is to downvote someone and note give explanation... Apr 13 '12 at 13:25
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FX is an abbreviation for foreign exchange. Sometimes you'll also see it referred to as forex.

It refers to transactions involving various currencies, and that is why it is called "foreign" exchange, because a currency conversion rate is always "foreign" from at least one party's point of view.

Foreign Exchange or Currencies are

  • part of an investment bank's treasury, for cash management functions or perhaps proprietary trading, or
  • the futures and options trading desk, for buy or sell side trading.

I can't imagine why both FX and Currencies would be listed as separate departments under Fixed Income. Fixed income refers specifically to bonds. Of course, bonds can be denominated such that there is foreign exchange exposure, see What is a Samurai bond? But there should be a Currencies or Foreign Exchange area that is uniquely separate as a department. That is where you would want to be if you wanted to be a currency trader.

Currency (or FX, or Forex) traders do not work on the Bond desk.

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  • You will be surprised to see load of other instruments other than bonds classified under fixed income. CDOs and CDs for example.
    – DumbCoder
    Oct 18 '11 at 7:43
  • FX/currencies are often grouped together with fixed income (e.g. Macquarie). Oct 18 '11 at 16:27
  • @DumbCoder Collateralized debt obligations are derivatives, or rather, structured products. So I would expect to see them on a Derivatives-type trading desk. Although there isn't much market for CDO's right now, and they aren't exchange traded with volume. Credit default swaps, well, yes, you have a point there. Are you certain they trade on the bond desk, not derivatives though? Oct 19 '11 at 1:11
  • @sheegaon In Macquarie's FICC division, services for sales, trading etc. are offered in 3 distinct categories: " Fixed income–interest rate, debt and credit securities, Currency–FX spot, forward and tailored services and Commodities–metals...and related futures " The FICC page and attached PDF describe staff as having "an underlying specialization in interest rate, commodity OR foreign exchange." Oct 19 '11 at 2:32
  • Agreed. There are, of course, different people specializing in the different areas. I'm just pointing out why the OP might be confused. Oct 19 '11 at 2:34

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