BB S&T vs Prop Trading Grad Programs
I've been fortunate to land an offer in both BB S&T and prop trading/options market-making. Trying to weigh up which is the better path to take. The sticking points I've identified are:
* I went through the SA program at the bank, so I could safely say I would enjoy working there. In contrast, I completed all of my recruitment for the prop shop virtually so I'm completely in the dark on what it's like to work there.
* I know I want to trade macro products, and ideally options/non-linear derivs. Unfortunately, the trading floor in my region is quite small at the bank and does almost no non-linear derivs. On the flip side, my understanding is that the type of trading done at prop shops is more about capturing spread rather than reflecting any macro view.
* If I were to land at the bank, my plan would be to move to a prop shop or the buy-side after a few years. Not sure how possible this is nowadays and whether prop shops even make experienced hires from banks (particularly if they had little options experience).
* Starting comp at the prop shop is actually lower, which surprised me and made me question why they were so different from their competitors in this regard. Its definitely a well-known name but obviously not in the same league as a Jane Street or Citadel.
Any comments on the above would be appreciated!
could you explain more about
'I completed all of my recruitment for the prop shop virtually so I'm completely in the dark on what it's like to work there'
The whole covid situation meant all of my interviews were conducted over the phone or video call, so I didn't get the opportunity to visit the office and meet traders other than the ones I interviewed with.
Big plus for the offer that's in NYC or Chicago since you'll have easier time to interview for other jobs in likely case you eventually change jobs.
At the prop shop, will you be trading alone or in a team? What is the career progression like? Do they have a formal training program?
Are you more risk seeking or adverse? BB will give you more flexibility and is relatively less risky.
Would you strive in a less structured environment? BB is more structured.
Hope these questions are useful to you.
I should have clarified that both of these roles are in the same city, which isn't NYC or Chicago (not even US based infact). Thanks for the helpful questions.
Hey I faced this choice myself and chose the prop shop (one of the big option MMs) from college. No regrets here. Some comments on your points
Does the prop shop you're at have macro desks? I would think there would be much greater liberty to take on positions based on macro at a prop-shop than at a BB actually. My shop has a macro desk that is purely positional.
We don't really do experienced hires
Do look at all-in comp and know what the bonus structure is like. For first-years, base may be lower than a BB(slightly only for my case). In a good year like this however, bonus is looking to be more than 4x base even for a first year. Comp also scales real quick if you're a rockstar much more so than a BB.
Apart from the upside in comp, the freedom to trade very early on and to explore whatever the hell you want is what I really enjoy here. The culture is really laid-back as well (you can wear shorts to work) and I work 10-11 hours a day max.
On the flip-side, the culling is pretty brutal and I would recommend prop only if you really back your abilities. I would say 60% of new hires make it past the first year so job stability wise BB is definitely better. Networking wise, BB also has a massive edge as we don't really deal with the buy-side and there is no real way to build connections on the job. Exit opportunities are usually limited to other props.
Could you expand on this a little? Is this desk still a MM desk and something that you would expect to exist at most reputable props? Also do you think that these desks are likely to be outside of Chicago/NYC? I was told that traders run fully delta hedged books so I would be somewhat surprised if this was a possibility for me.
This is exactly what I was expecting, so I was surprised when I was told to expect an all-in amount for my first year which would almost certainly be lower than my BB all-in. Any thoughts on this? I am slightly worried about this, given that I was unsuccessuful recruiting for the other few prop shops I applied to. What typically happens to juniors that get cut? I understand it's pretty unlikely you will pick up other trading roles.By positional, I mean positional in vegas/gammas and less so deltas. These positional desks are purely liquidity taking rather than providing. Though it is not unheard of to book out a call spread and not hedge any deltas on it....
Hmmm interesting. Any idea on comp progression then? That is still more important than first year comp
Wouldn't use recruiting as a barometer for how well you would do in prop. I think the two key factors for doing well are 1. passion for the markets and 2. an entrepreneurial spirit to solve hard problems independently. Juniors who are let go are usually missing one or the other. Frankly, most of the juniors who get cut figure trading is not for them and move on to other industries.
It's rather unusual for a top prop MM to offer lower than BB, but certainly happens more often for second tier and at top tier in some cases. The idea is that a first-year is unlikely to make big impact very soon and that's mostly right, and a big offer is made almost solely to compete for talent.
I'd say you'll need to know more about these through whatever means you can get:
Starting pay is usually inconsequential compared to a good shot at becoming a star. On the other hand, a firm that doesn't pay juniors competitively may be hurt by the lack of talent in the long run, but that can be offset by good senior / star retention and strong learning opportunities.
I have some questions about recruitment (not in us too), but don't want to change the focus on the topic. I sent you a private message, if you have time, please give it a check. Congrats for both offers!
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