Job at time of interview: Managing Director, Sun Life Investment Management
I work for Sun Life Investment Management, the investment arm of Sun Life Financial. I oversee derivative, including fixed income, equity, and FX, as well as cash equity trading for Sun Life worldwide.
It helped me to establish a good understanding of risk management from which to build upon. It provided a comprehensive profile of the myriad of risks that we face and provided me with an appreciation of the risk metrics that need to be monitored, analyzed and quantified. There is another person on our team who is an FRM, and it has helped him with the risk evaluation duties of the position.
Sun Life established a derivatives group in 2001, which I subsequently joined from the portfolio management group. I decided this was the best way to immerse myself in risk management and derivatives.
Take good study notes, as you will likely discover that a topic covered in the exam will pop up in your career. You may end up revisiting the material that you learned while studying.
By 2005, the group's role had expanded to handle derivatives worldwide for Sun Life. Since our group trades derivatives for Sun Life companies worldwide, we need to be familiar not only with fixed income, equity, and FX derivatives, but also be knowledgeable about many different geographical markets. The derivative market isn't one large market; it is a compilation of many smaller markets.
Even though it reduces risk by requiring the posting of initial margin and standardizing terms of collateral and variation margin, it will concentrate the risk at the central counterparty (CCP). In addition to this challenge, there are two items that will be difficult to solve: 1) the harmonization of global regulators, and 2) the availability of enough liquid collateral. The collateral issue could be resolved over time as the CCPs become more comfortable with additional forms of collateral, but I fear the harmonization of global regulators won't be resolved until we see a significant international event that exposes the gaps that exist.
We currently voluntarily execute many derivatives electronically, including interest rate swaps, but the SEF rules will require us to trade electronically via a SEF in the near future. Currently, we have documentation in place with one SEF and we are pursuing a second. I believe there are almost 20 entities vying to become SEFs, and when the dust settles there will likely be far fewer. Since the derivative market is somewhat fractured, it may allow more SEFs to survive, but I still don't fully anticipate the SEF business model being profitable.
Historically, trading derivatives was fairly straightforward. Price discovery was simply staying on top of the markets to find the dealer with the best price. That changed about 5 years ago when derivative valuation became agreement (i.e., ISDA) specific. The financial crisis exposed the optionality embedded in these legal agreements and that has reverberated throughout the derivative industry. Our primary focus, especially when considering putting a new trade on, has turned mostly on the costs and implications of holding and getting out of the trade.
I have had a few good mentors, but the best lessons were given to me by my parents. Those were the importance of developing a good work ethic, confidence, and patience. These abilities have allowed me to continue to learn and excel not only with my career, but also more importantly in life.
Anyone who knows me can attest that I enjoy basketball quite a bit. As a result, I spend a decent amount of time at the gym, which for the past 10 years has been at the Greater Boston Y - Waltham Branch. I have gotten to know many people at the Waltham Y, and I was honored to try and help further their cause, which is much more than just providing swimming lessons and an opportunity for people to use the gym. The Y makes such a large difference in so many people's lives as it strives to impact the community and be a social service. This role provides me the opportunity to give back.
Being a member of a professional association such as GARP has allowed me to build credibility with others in the industry and has given me access to a wealth of knowledge.