blog Bonorum et Malorum

Sell side Vs Buy side

Written by Fmi.Online
Sell-side roles in an investment bank

Success in the finance industry requires learning a lot of jargon. In finance, you will often hear roles described as either “sell side” or “buy side.” This article aims to demystify the language around these terms and explain specific roles on the sell-side.

The sell-side refers primarily to roles within an investment bank or the investment banking division of a universal bank. The primary function of an investment bank is to help institutions raise debt and equity capital to institutional investors such as investment funds, hedge funds, insurance companies, sovereign wealth funds, and pension funds.

The buy-side are the institutional investors who are buying these securities in the primary market. Another function provided by sell-side investment banks is to facilitate the buying and selling of these securities once they have started trading on the secondary market.

Here is a fuller description of the primary and secondary markets.

In primary capital markets, investment banks work with clients to help them raise debt and equity capital. These equity and fixed income securities are sold directly to institutional investors through either the equity capital markets (ECM) or their debt capital markets (DCM) desks.

In secondary capital markets, the investment bank’s global markets division executes trades on behalf of buy-side and other institutional investors. This means the global markets divisions finds and matches buyers and sellers of securities.

Sell-side roles

Roles in a sell-side investment bank include several essential functions that enable it to meet the needs of its institutional clients. Those roles include:

  • Investment banking (M&A and corporate finance) – These roles are the primary relationship management roles that interact with clients.  The investment banker’s role is to understand its clients’ financing requirements needs fully and to win business for the bank
  • Equity capital markets – The ECM desk takes over once their investment banking colleagues have identified a client needing to raise equity capital. The responsibility of the ECM desk job is to take corporations through the initial public offering (IPO) process
  • Debt capital markets – The DCM desk does the same roles as the ECM desk but in the debt capital markets
  • Sales and trading – Roles in sales and trading work with their ECM and DCM counterparts to sell securities from primary issuance to investors and be an intermediary in the secondary markets. Being an intermediary involves buying and selling already issued securities on behalf of clients, either as members of exchanges themselves or through their inter-broker dealer network
  • Research – Sell-side research analysts help both the ECM and DCM desks, along with sales and trading, by providing value-adding insights on the companies and other organizations they cover. Sell-side research is communicated to clients by people is a sales role, sometimes referred to as Research Sales.

The following diagram is a useful overview of how sales, trading, and research roles between the sell-side and buy-side help clients execute trades in the secondary market (from the FMI Introduction to Global Markets course)

Buy-side clients

The buy-side broadly refers to investment managers, also referred to as institutional investors. They invest money on behalf of their investors across various asset classes using multiple investment strategies. Here is a simple overview of institutional buy-side clients (from the FMI Introduction to Global Markets course).

Institutional investors are sophisticated and knowledgeable investors that trade large blocks of assets such as equities and bonds that can lead to significant price movements.

Global markets desks will execute trades on behalf of their institutional clients, as global markets desks are members of exchanges while institutional investors are not. Traders will use their skills to execute these large trades for the best price possible.

Because of their size, institutional investors can often negotiate better execution fees from global markets desks.

More Articles

How to Build a Successful Career in Asset Management: Tips and Strategies for Finance Students

In this article, we will explore some tips and strategies that can help finance students build a successful career in asset management.

Read more

Mastering financial modelling: Your comprehensive guide to building a DCF model from scratch

A Discounted Cash Flow (DCF) model is a financial model used to value investment by estimating its future cash flows and discounting them back to their present value. It is one of the most popular valuation techniques used by investment bankers, financial analysts, and equity researchers to value companies, projects, and other investment opportunities.

Read more
Asset Management

The Art of Cracking Technical Interviews for an Asset Management Role at Top Banks

Asset management is the practice of studying, acquiring, and trading investments with an aim of increasing total wealth over time. The sector offers lucrative opportunities with sizable salaries for you to pursue. Asset managers are often referred as portfolio managers or financial advisors as they perform this service for their clients. Asset management companies are […]

Read more
Asset Management

Top 5 Asset Management Career Paths and How to Get Into Them

In an era of wealth preservation, product innovation, and creation of alternative asset classes, asset management (AMC) is emerging as a promising career path. The global asset management industry is estimated to grow and reach a value of over a trillion dollars, $1,113 billion, by 2028, growing at a CAGR of over 23% for 6 […]

Read more

What maketh an Analyst?

Last August, I got the chance to mentor a student based in Singapore and he’s waiting for his graduation. We started on which type of career he wants, and I asked him about his background. Fortunately, he was trading Foreign Exchange.  It’s a good thing that he already understands Technical Analysis, and we got connected […]

Read more

Role of a Fund Manager and How You Can Get Into It

A fund manager is an investment professional responsible for investing and managing a company’s portfolio of funds. This can include mutual funds, pensions, hedge funds, equity funds and so on.  Fund managers are typically classified as active or passive managers. Active managers are involved in buying, selling, and holding investments actively in order to outperform […]

Read more

3 Ways Finance Simulations Can Help You Acquire Skills and Knowledge Quickly

If you have tried working with any aspects of financial markets, be it professionally or by investing in stocks, you would know that this field isn’t the easiest to understand theoretically. What you need is to learn by doing. This is possible through finance simulations.  These are mockups of a financial concept, created using mathematical […]

Read more

Understanding the Difference Between Tangible and Intangible Assets

An asset is something of value which is owned by a company. For companies, assets can be classified in different ways. For example, assets owned by a company can be current assets or non-current assets. Another way to classify assets are as tangible assets and intangible assets. This second way of classifying assets is the […]

Read more
Our Courses are designed to boost your career

Launch your career with Fmi’s Learning Pathway

Choose a learning pathway that best meets your needs and ambitions. Not sure which Fmi learning pathway is right for you? Explore our CareerBuddy videos for help and advice.

Investment banking pathway

Investment banking pathway

Monthly Subscription
  • courses-clock60+ hours
  • courses-desktop9 courses

Investment banking offers many exciting career opportunities for students. From Financial Analysts to Investment Management, and Sales & Trading to a wide range of roles in infrastructure such as IT, Risk or Compliance. This pathway is designed to help you understand the investment banking industry, the roles investment banks are recruiting for, and most importantly, help you to develop the practical skills you need to get into the industry and your preferred role whether this be as part of a school leaver, intern or graduate program.

FMI Online Student join-student-img2 FMI Online Student
55,000+ students currently enrolled
Global markets pathway

Global markets pathway

Monthly Subscription
  • courses-clock70+ hours
  • courses-desktop10 courses

Global markets provide a range of important products and services to corporates, institutions and governments worldwide from executing trades and managing risk to providing quality research content. A key business area in all investment banks, global markets offers a wide range of career paths for students to consider across all functions and at all levels from school leavers to internships through to graduate programs.

FMI Online Student join-student-img2 FMI Online Student
85,000+ students currently enrolled
Asset management pathway

Asset management pathway

Monthly Subscription
  • courses-clock50+ hours
  • courses-desktop8 courses

The asset management industry is a global industry worth over 100 trillion US dollars. It plays a crucial role in managing the assets of retail and institutional investors, offering a wide range of exciting careers in doing so. If you’re looking to forge a career in asset management, our Asset management pathway is perfect for you. We help you build the skills all asset managers are looking for and explore everything you need to know about the industry and the wide range of roles available in the sector

FMI Online Student join-student-img2 FMI Online Student
100,000+ students currently enrolled