Top 5 Citi Sales and Trading Interview Questions
By: Sales
Tags: Internships, Citi, Sales And Trading, Investment Banking

Top 5 Citi Sales and Trading Interview Questions

In my experience, having talked to hundreds of those looking to break into sales and trading over the years, the three most coveted firms mentioned are Goldman Sachs, J.P. Morgan, and Morgan Stanley (largely in that order).

While those three firms are great — I received an offer from two of them — there is one firm that for whatever reason flies a bit under the radar for those in college.

The reality is that in sales and trading you want to join a bank that has a very strong presence in the types of products you want to be involved with (on either the sales or trading side of things).

In FICC (Fixed Income, Commodities, and Currency) Citi is a leader in nearly every asset category as you can see here:

Courtesy of S&P Global

While no one should make their decision about what bank to join purely based off of where they rank on league tables, these rankings are an indication of the strength of the platform you’ll be joining.

Citi is the second largest bank in the United States; has a large presence in LatAm, Europe, and Asia-Pacific; and has consistently prioritized enlarging their sales and trading business.

With that being said, as this league table confirms, if you are interested in equities sales or trading then Citi is likely not the ideal place to be (although they have a reasonably strong equities derivatives group and it is growing).

However, if you’re interested in any area of FICC having an offer from Citi will set you up as well as any other bank on Wall Street.

Citi Sales and Trading Internship Structure

Citi operates their sales and trading summer analyst program on a rotational basis. This is the same as is done at most other large banks, including Goldman Sachs.

However, there are two notable banks that utilize fixed-placements where you are on the same desk for the entire summer: J.P. Morgan and Morgan Stanley.

The reality is if you get an offer to any of these firms you should be ecstatic. With that being said, I am a big fan of rotational programs as it will allow you to explore a number of desks and make sure you land in the best possible place.

I don’t want to get ahead ourselves here, since you likely don’t have an offer in-hand yet, but I can’t stress enough that even if you are entering into a rotational program you need to do your homework, have several desks you are interested in, and make sure you rotate on those.

If you don’t come into the summer analyst program at Citi with a strong leaning to certain desks you may end up wasting a good part of the summer on desks you have no interest in.

Preparing For Your Citi Sales and Trading Interview

In my prior post I went over the three things you absolutely need to do prior to your interview (whether this is for a full-time or internship role).

These three things are:

Gain Contextual Understanding (meaning, understand roughly how the trading floor operates) Know What Desks You’re Interested In Be Prepared for Technical Questions

I’ve also put together a longer post as well that’s worth going through that dives a bit more deeply into the summer analyst interview process, if you’re applying for a Citi sales and trading summer analyst position:

If you’re still a bit confused on what exactly sales and trading is, what desks exist, and what the specific role of a trader or sales person is in 2021, be sure to check out the very lengthy post I made on all of that here:

With all that being said, let’s get into the most common questions you’ll face at Citi.

Note: One thing you should be aware of is that the technical and market-based questions you’ll face will largely be in FICC because that is where most people in S&T work within Citi.

Question 1: What are some reasons why a corporate client may want to do a FX trade?

This is a great question because it gets to whether you understand the client needs that drive activity on the FX desk.

As you can imagine, there are dozens of potential reasons why. Don’t worry about giving dozens of potential reasons. Just two is completely sufficient and will be impressive to your interviewer.

A client could have issued debt in another country, perhaps due to favorable debt markets there, but wishes to have that currency in a different country (for example, many Canadian companies will raise debt in U.S. dollars and then swap it back to Canadian dollars) A client may be looking to spend a significant amount of money in a foreign country building, for example, a new manufacturing plant. However, they want to lock in their costs in the foreign country’s currency so they will engage in either a forward or spot transaction.

Question 2: What drives moves in the FX market?

Often in a sales and trading interview you will face these kinds of broad questions. It’s important not to get overwhelmed and begin spewing out everything that you know (or think that you know).

Instead, you should attempt to keep your answer to under a few minutes and make it clear that obviously you don’t have all the answers.

The right answer to this kind of question is that moves in FX pairs (like EUR/USD, USD/JPY, etc.) are always relative. Since no fiat currency has some underpinning, like gold, it is simply the relative strength or weakness of any given currency that moves the other.

This requires those working on the FX desk to have both a global macro perspective — understanding what is moving the economies of each country in a currency pair — and a micro perspective where you understand the technical phenomena that can move a currency.

Things to focus on are the relative weakness or strength of a country’s monetary policy, macroeconomic policy (GDP growth, inflation, etc.), and politics (deficit spending, political stability, foreign policy adventurism, etc.).

A way you can see this is perhaps through one of 2021’s most consensus trades, which is being short the US dollar. As you can read, this bet is placed due to a belief in sluggish US growth relative to other major economies, high deficit spending, and prolonged easy monetary policy.

Question 3: What Is The Role of Someone In Sales? Does It Interest You?

Many will come into a sales and trading interview knowing a reasonable amount about what someone in trading does, but will have much less of an idea about what someone in sales really does.

In fact, in my experience roughly 70–80% of those who get a summer analyst position think they want to do trading.

The reality is that sales within the sales and trading context is one of the most underrated jobs out there. Period. The compensation can be phenomenal, the stress significantly less, and a large part of your job is talking to interesting people throughout the day.

The role of a sales person is to manage a book of clients in no different a way than how a trader manages a book of risk. Each sales person will have a dedicated asset they cover and a set of clients who often will need to trade that asset.

The sales person will have conversations throughout the day with all of their clients; talking to them about where markets are, what they think about markets, and what other market participants are doing.

The client will then tell the sales person a trade they’d like to execute and the sales person will relay that to the trader who will make a market (give a price) on the trade.

From the client’s perspective the sales person is really the face of the bank. So the sales person has a significant responsibility to manage both the reputation of him or herself, but also the reputation of the bank as well.

Question 4: What Are Municipal Bonds?

Citi is known as the leader in municipal bond trading. This is one of the many areas of the trading floor that interns don’t know much about.

In fact, many have a rather dismissive attitude towards muni bonds. However, this is one of those areas of sales and trading where markets are opaque, bid-ask spreads are wide, and you can carve out a very nice career. It may not be the flashiest area, but you should be chasing after what is “hottest” at present because it is liable to flame out over time.

Municipal bonds are bonds issued by a State or local authority (in the United States) in order to finance things that are broadly in the public interest. These kinds of things could be highways, electrical grid upgrades, hospitals, sewage plants, etc.

The key to muni bonds is their tax exemption quality. Interest income earned off of the municipal bonds is tax exempt at the federal level and most states will likewise wave the need to pay state tax as well (however, there are many exemptions and qualifications at the state level).

What is so intriguing about municipal bonds is that unlike treasury bonds, which are all issued by the U.S. Treasury as the name would imply, municipal bonds are issued by thousands of small authorities along with the major States.

With so many issuers and so many outstanding bonds the market is highly illiquid, nearly impossible to automate in any significant way, and allows for banks to make quite a bit off of them (which is why it’s a great place for a trader or sales person to be!).

Question 5: Tell Me How You Keep Up-to-Date on the Markets?

This is one of those questions where people can sometimes go a bit overboard.

The reality is, in my opinion, you shouldn’t speak as though you follow the market closely if you can’t fully back that up.

For example, many people say they follow the markets closely, but in reality are only following the equity markets (and how equites are moving broadly just isn’t that relevant to most of the trading floor).

You should say that you skim through the Wall Street Journal, The Financial Times, and Bloomberg. You should say that you try to pay attention to things outside of equities like rates, credit, and FX (although these things are harder to do, as less is written about them).

It would also be impressive if you said you follow some equity research analysts, rates strategists, or economic analysts at the major investment banks.

Of course, if you say you follow some of these folks you need to actually follow them and be prepared to talk intelligently about what they’ve said in the past.

No one is expecting you to be an absolute expert and follow the markets as closely as someone on the floor would. After all, being in college there are somewhat more important things to be focusing on!

My main piece of advice for these kinds of questions is to never go overboard. Never claim to follow things that you don’t really follow or can’t talk intelligently about if asked a follow-up question on it.

You should of course be able to demonstrate a rough interest in the markets, but that’s all they want.

Conclusion

Citi offers one of the best sales and trading experiences you can have as a summer analyst.

They will ensure you get exposure to a number of desks and if you prepare properly prior to beginning you’ll be able to find the desk and the role that’s right for you.

As mentioned in the introduction, whenever someone asks me about Citi I always try to street them in the direction of looking at areas of FICC as opposed to equities (given how strong Citi is in FICC).

As always, best of luck. If you’re looking for hundreds of more sales and trading interview questions, along with nine desk-specific guides to get you up to speed, then be sure to check out the prep guide.

I spent months putting it together because there is so little real-world interview and internship prep material out there.

Also, if you’re looking for some more practice questions, I’ve put up a list of ten more of them here:

As always, best of luck! Be sure to let me know if you have any questions.