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No, the feedback loop isn't closed. The fish customer just keeps handing his spread to his favourite sales guy. I've witnesses this several times, some trader
by lordnacho 9mo ago
No, the feedback loop isn't closed. The fish customer just keeps handing his spread to his favourite sales guy.
I've witnesses this several times, some trader always uses the same relationship, irrespective of cost. I've seen this both in terms of friends from a long time ago helping each other, family, or backhanders.
And so the real winner is that sales guy. I've known people climb to the very top of well known institutions on the back of relationships with just one hedge fund.
What you're describing is a sort of ideal market from an economics textbook.
- fancyfredbot 9mo agoThe situation you are describing definitely happens, people have their mates they like working with and a single relationship can make a whole career. Normally though, such relationships do not involve the sales person charging significantly above market rates. The client usually has very strong incentives to reduce costs. While a single salesperson might build a career on a chummy relationship this isn't a sustainable approach for an entire firm to take because it is too unusual. The majority of the revenue is coming from client/sales relationships where the client is at least somewhat price sensitive and sufficiently savvy to get more than one quote.