I now see 2 broad categories of financial products–
A) Analytically complex instruments — CDS, IRS, structured, IR-linked, index-linked(?), MBS, swaptions, embedded options… Usually derivatives.
** You often need sophisticated valuation engines for pre-trade quoting and/or risk
** If such a product (say bond with option) is liquid then you may get tight bid/ask and need no sophisticated valuation engine. However, I feel most of these instruments have large spread.
B) high speed, high volume markets – stocks, major indices, FX spot, ED futures, Treasury,
** These are by far the most heavily traded and prominent products, often with low (profit) margins
Many popular or dominant instruments do not fall into either of these — vanilla bonds, vanilla options, FX options, FX futures, FX fwd, VIX
Any product falling into both categories? I don’t think so.
Products in (A) often give practitioners a sense of job security due to the specialist knowledge required. However, I usually stay clear of exotics. I tend to feel INsecure away from the mainstream.
Some System developers in (B) may have no real product-specific insight. They probably do not analyze data — historical data; or summarize (to make sense of) large volumns of data; or fundamental analysis; or statistical analysis