Top 4 RBC Global Markets Interview Questions

RBC Capital Markets is not only the largest sales and trading platform in Canada, but also has made significant inroads in the United States.

RBC's Capital Markets Global Markets Program is the rather lengthy name of RBC's summer analyst and associate program for sales and trading. This is where nearly all full-time analysts and associates are drawn from, unless they happened to have another S&T summer internship at large investment bank elsewhere.

RBC's program is generally viewed as being the most competitive S&T program to get into and generally has just 10-15 spots available. Further, due to Canada being less of a global capital markets hub than New York or London there are significantly fewer seats available than what you would find in New York, for example. 

This is all a rather long winded way of saying: breaking into sales and trading in Canada is difficult and highly competitive. So coming into your interviews prepared is absolutely essential. 

As for the interviews themselves, they'll follow the same first round and superday format as any other front-office job would entail. The primary difference is that at RBC you can sometimes have two-on-one interviews (with two interviewers facing you) as opposed to the more industry-standard one-on-one format. 

What You Need to Know When Interviewing with RBC Global Markets

One general comment I would make - before getting into the interview questions themselves - is that if you're interviewing for a roll in Canada, you need to make sure that your terminology and knowledge is Canada-specific.

By this I mean, you don't want to state an interest in fixed income and refer to govie bonds - or CGBs (Canadian Government Bonds) - as treasuries (which is what U.S. government bonds are referred to). 

Likewise, you don't want to know where the 10-year treasury is, but have no idea where the 10-year govie is in Canada

Any trading floor in Canada is going to be Canadian-centric (as you'd expect!). Corporate bonds are going to be from Canadian-issuers, government bonds are going to be issued by Canada, etc. 

Even in FX - where obviously you'll be dealing with currency crosses globally - you'll still be spending a great deal of time on Canadian dollar flows.

RBC Global Markets Interview Questions

Below are four questions that demonstrate the style of questions you should expect in your interview and how you should approach answering them. 

Question 1: What area of the trading floor interests you most?

Question 2: What are STRIPS?

Question 3: What has been the most interesting development in Canadian fiscal or monetary policy over the past few years?

Question 4: What do you think is driving the USD/CAD cross?

What area of the trading floor interests you most?

Unless things have changed over the past few years, RBC's Global Markets Program places you on a specific desk. While you'll likely be encouraged to float around a little bit, the program is not similar to firms like Goldman that will have you rotating around the floor. 

Further, unlike in the US, the summer program for RBC GMP is going to be a full four-months so you will very much be embedded in one area of the floor.

This makes having a clear view on which area of the trading floor you want to be placed on incredibly important (you may find the desk guides helpful in figuring this all out). 

When discussing what area of the floor interests you the most, you shouldn't be too specific, but rather keep it to a broad division (such as fixed income, FX, commodities, or equities).

You should then express an interest in learning more about - but not being wedded to - a certain desk. For example, if you highlight fixed income as an area you'd like to be in then you can say you'd be interested in learning more about rates trading and in particular how provi bonds (provincial bonds) are traded due to the illiquidity and the vast difference in the characteristics of issuers (from small provinces like New Brunswick to large provinces, with large debt loads, like Ontario). 

This is a question you will unequivocally get - due to the fixed-desk nature of the program - and so you should think seriously about where you want to be placed and what specific products within these divisions would be of interest to you.

There's no need to get too caught up in thinking that you'll be forever tied to whatever you do for your summer internship, but you will more likely than not be on the desk you summered at. 

What are STRIPS?

When you express an interest in a certain division - like fixed income - you may likely get questions about either Canadian specific products (like provi bonds) or about more niche securities that are traded (such as STRIPS).

No one expects you to be expert or to answer overly technical questions on the unique dynamics of these more niche securities. Rather, what folks are looking for is that you can just define what they are, which demonstrates that you have a relatively keen interest in the area.

So, all STRIPS is when the principal and coupon payments of a bond are traded as distinct from each other. STRIPS in Canada generally revolve around Canadian government bonds and sometimes provis.

The nature of STRIPS is no different than what you find for Treasury STRIPS, they just revolve around a different group of securities (government bonds issued by Canada rather than by the U.S.).

What has been the most interesting development in Canadian fiscal or monetary policy over the past few years?

Obviously after the onset of the pandemic there was a rapid response in terms of both fiscal and monetary measures, many of which will be difficult to unwind (similar to what occurred post great financial crisis). 

One of the most interesting programs launched by the Bank of Canada was the Provincial Bond Purchase Program, which has resulted in the Bank of Canada purchasing large volumes of provincially issued debt. 

While quantitative easing - the purchasing of federally-issued government debt by a central bank - has become relatively common place, the purchasing of sub-sovereign debt (issued by provinces) is a marked departure from the norm.

The rationale behind this program was that in March and April of 2020 many provincial debt offerings were in danger of not being filled (meaning the demand for securities was not meeting supply). In order to try to calm markets, and provide a backstop, the PBPP was launched. 

Interestingly, the Bank of Canada is not offering to buy securities directly from provinces, but is instead offering to buy securities in the secondary market. This is meant to give market participants confidence that if they buy provincial bonds at issuance there will likely be some market for them (even if it's just the BoC, in the worst case example) in the months thereafter.

Canada has some of the highest sub-sovereign debt levels of any developed country and the events of 2020 have revealed the capacity for liquidity to dry up (meaning there are limited buyers during times of high volatility), which can cause a massive disruption to orderly debt issuance and auction pricing at issuance. 

While there are many other ways to answer this interview question, by talking about the PBPP you're picking a more obscure topic that your interviewer will likely find impressive. 

What do you think is driving the USD/CAD cross?

Of course, the Canadian and American economy are incredibly closely intertwined and so even when you're dealing with Canadian-specific securities - like government bonds - you still need to always view them in relation to what happens in the United States.

When thinking about FX - like USD/CAD, in this example - you need to think in relative terms. 

For example, Canadian economic underperformance is usually going to lead to a CAD weakness. Or monetary policy that is significantly more hawkish - meaning more tight - will lead to CAD strength. 

Of course, keeping the former example going, monetary policy in both the U.S. and Canada in early 2021 is incredibly loose. However, relative differences in the degree of looseness (often called dovishness) will lead to quite significant differences in the exchange rate overall. 

In early 2020, with the onset of the pandemic, USD/CAD spiked to $1.44, which is the highest level seen in the past five years. However, at roughly the same time a year later, USD/CAD is at one of the lowest levels seen in the past five years.

Conclusion

RBC's Global Markets Program offers one of the best introductions to sales and trading that you'll find anywhere. However, it's also likely as competitive as any sales and trading program in the world given the limited number of students they take every year. 

There are two things you should keep in mind when interviewing:

  1. The trading floor (obviously!) focuses on Canadian-specific securities primarily, so you need to make sure you know the terminology and where key securities or benchmarks are trading (TSX, 10-year CGB, USD/CAD, etc.)
  2. Because I believe the Global Markets Program is still non-rotational, you should have a clear idea of what division you'd like to be in and what specific products you'd be interested in dealing with 

If you're looking for more resources to help in your prep for sales and trading interviews, be sure to check out the guides we've put together. We put them together due to the utter lack of information about how to succeed in S&T interviews and what you need to know about desks prior to beginning. 

Leave a comment

Please note, comments must be approved before they are published