I feel like there's really not a lot of discussion about S&T/The specific areas of sell-side trading on here anymore. Sooo I want to see what people's opinions are on the different desks with respect to a few different categories.
1. How smart are the people / How technical is the product
2. What is the culture like
3. Where do you think it's heading in terms of size and profitability (see technology)
4. Would you want to be there right now
***These are my perceptions after my SA stint at a top BB, I realize they're probably wrong as fuck***
Equities (Cash) - Bros, not technical at all, seems like a sales gig, wouldn't want to be there as I feel like they're gonna downsize even further and there's just no ability to make money
Equities (Derivs) - Total opposite, extremely technical especially for the exotic stuff. Everyone I met seemed very smart and somewhat weird. Wouldn't mind being there if I fit better because I think it's probably going to remain profitable.
Credit - The guys seemed nice, not super technical but they seem to be well respected and I don't think they're going to go electronic anytime soon
Rates - Really didn't have much exposure. I sat with the repo traders for awhile, it was all very fast-paced and I didn't retain much. I imagine they're all pretty smart.
FX - Same as rates I guess except they're probably more likely to become more electronic. I don't understand how you generate substantial PnL with spreads that thin
SPG (Securitized Products) - The guys at my shop are pretty preppy for the most part, I believe a lot are former athletes. Seems like it's very safe in terms of not being replaced by technology except for maybe the TBA traders. Ranges from not all that smart to brilliant depending on where on the pass-through -- CMO derivative spectrum you are.
Again, I'm a dumb kid who just finished a summer. I want to hear perspectives from people who actually know what they're talking about. Not facts, just people's perceptions of how things are and where they're going.
I'll be able to add more once I start working FT a bit on my desk, but wanted to share a helpful link to kick things off.
http://www.wallstreetoasis.com/blog/picking-the-right-trading-jungle
My observations on sales/trading:
1.You can make a decent living doing very little, if you are in the right seat. There's no systematic way of finding these seats, people just kind of luck into them. I don't mean a seat with the absolute highest P&L potential, more like the highest ratio of "all-in take home comp" divided by "amount of effort/stress"
A lot of traders have no clue about the fundamentals of what they're trading. They care about what makes the market go up or down on a given day. And what makes the market go up is people buying, and what makes the market go down is people selling. So you can do pretty well if you just follow what makes people buy or sell something
If you have the choice between a linear/delta-one desk, and a non-linear/vol/options desk, both in the same asset class, the options desk is usually a better choice
If you are choosing between 2 offers, I would decide based on this: a. Product = People (depending on personal preference, either can be more important) b. Firm For example, with the people being equal, I would go for RBS FX options over GS FX spot.
I really don't know if sell-side trading is a good place to be in the medium to long term. I know I would not want to be there right now. I mean, I don't want to be here right now. lol
just my 2c
@whalesquid123 Can I ask what makes you think sell-side trading isn't a good place to be?
@whalesliquid: I think that #2 is the most important part that you mention. This is all that matters. Everything else is really insignificant.
RBS FX options over GS FX spot... Interesting though, I see where you are coming from, but the difference between GS and RBS is well, pretty much everything, but correct me if I'm wrong.
Also is GS FX options known to be good?
There is no skill involved for 90% of the people on the S&T desks. They have connections and client bases that they have built up, and are dinosaurs which firms are waiting to send into forced retirement first time they don't bring in the money.
The new people enter their tickets because the dinosaurs don't know how to work their computers unless it means sending instant messages on bloomberg in all capitals because they don't realize their caps lock button is on.
Expense reports all day, every day. Also, if you want to make bank while having little stress since your desk always does enough, get on the securitized products or emerging markets desk in fixed income.
This is also a serious response. Derivatives and buy side/relative value desks are the only areas which really require any skill.
Im mainly interested in Coverage and M&A as a junior in college at the moment. However I've been trading retail FX since i've been in high school. I bring in average returns from risk management and i love trading. In 2017 is s&t fx even worth it. I study fundamental and technical theories as well. My fear is the head count is so low they wont even take someone like myself on. I would also like to make some sort of bank in S&T as well. Is there anyway i can survive in the current environment other than fixed income or s. products.
FX Options - best way to start a career in S&T. Citi currently has the best FX options (and spot) desk on the street.
Maybe you should do some research? If you want to do FX, Citi right now is the place to be. Deutsche as well....
I have an old research paper found in one of my MSc in Finance course and the 2005 top dealers in FX were respectively : DB, UBS, Citi, HSBC, Barclay, ML, JP, GS...
It appears that DB and City are still in the game.
DB is the best for FX trading followed by Goldman and UBS. For commodities, it's Goldman and Morgan.
Love the cute little pissing match.
ha
What group were you in, @Anonymoose?
SPG - I liked it a lot because there are elements of options, rates, credit, etc. so I feel like you get exposure to a lot of different elements of Fixed Income. And like I said I don't think it's going anywhere anytime soon and I believe our SPG desk is very profitable.
@"xyzMan" I would go to Nomura or RBS to trade a good product any day over a crap product at a "tier 1" bank (whatever that means in S&T). What do you mean "is GS FX Options good"? How much money they make? This can swing wildly year to year, trust me on that. Whether the people are nice and will teach you stuff? You can't know that without sitting on the desk, and anyone on this forum who's in a position to give you that info wouldn't do so. The more important question is, is this a desk where I can do well (relative to other options in S&T) if I am good? I venture that there is a higher probability of that on the options desk relative to the spot desk of the same product.
@"yeahright" Either we work on the same desk or S&T is more broadly fucked up than I thought. Either way, 100% agree. Not to say you can't find legit people running around, but because of the "selectivity" of the recruiting process, a lot of people mistakenly think the caliber of your average S&T person is higher than it actually is. Again, my pitch for an options desk: you are more likely to find these legit people in a tough complicated product (self-selection, survivorship bias, etc.)
@"jv2324" How do you define "best"? Someone who gets on an options desk should be thankful enough they even got the spot, much less be anxious over whether it is at GS or DB or Citi.
@"smashzR" The award for totally missing the point goes to...
@"Dece" I don't think sell-side trading is necessarily a bad place to be. I think your experience will vary wildly (and I mean WILDLY - you can't imagine) based on the product and the people. The probability of getting to trade a good product AND work with good people is very low. Why? The number of good (read: interesting and profitable) products relative to the number of total products traded is low. And the number of mediocre people relative to the total number of people in the business is high.
@whalesquid123 So then what do you consider to be a "good" product? I'm probably going to end up trading non-agency MBS (although I really don't know where specifically I'll be within mortgages). In your opinion, is that not as good of a role as trading, say, CMO derivative products like IOs? I understand that cash equities is shitty compared to equity derivs, but are you saying that derivatives products are always better?
I feel like discussions like these really just don't happen anymore so I want this to be a thread where people with experience tell others what they think about the industry.
@whalesquid: How about trading distressed at a boutique with a kickass payout?
Let me insert my bias and say that I rotated on Citi's FX Options desk. Beyond the fact that I've never been drilled/taught so much in such a short amount of time in my life, they make a shit ton of money and see a lot of the market. Also really awesome people. I really enjoyed it - but that's not to say Deutsche has a worse options desk. After all, Deutsche had been at the top of Euromoney rankings for years until Citi topped them for the past two cycles. Regardless, you don't go to Goldman to trade currency options or spot.
Also, in terms of FX spot and being profitable....the profitable firms in FX spot are the firms that see the greatest market share for the simple reason that more pieces of the puzzle are turned over. One trader told me that he had one client who he consistently lost money with because he was always taking the other side to the clients' trades (the client was right right 80% of the time). But he said that the information value of that client allowed him to profit by taking prop positions on the client's direction. Cool stuff haha
This has been fun and all but there still haven't been many people to actually address the question. I'm really looking for desk-by-desk descriptions of the people/exit opps/profitability/etc. I don't give a shit who has the best what, I want to know about how the product is OVERALL.
Is there really no one who has had enough exposure to multiple desks to offer some insight/comparisons?
Funny you should say that...
Anyway, I wouldn't be so quick to knock the ongoing discussion in this thread. It just added another dimension that was lacking in the original one I linked to. Namely, the specific trading desk -- both the product traded as well as the caliber of the people on that desk -- is generally more important than the "prestige" the bank's name might have.
Look man, you asked a question, the answer isn't going to just present itself. Do you actually think there's some magical person out there who's worked on every desk at every firm and knows every product class like the back of his/her hand? Because there isn't. So the answer to your question is just going to come through as a bunch of opinions by a bunch of people who have worked in various places. A little demanding for someone getting free help...
I don't want "free help", I'm trying to get people to talk about S&T instead of commodities trading or prop for once since it seems like that's the only thing that's in this forum as of late. And yeah, opinions about different desks is what I want, but so far it's been a lot of people making unsupported claims about what BB has the best FX desk.
And you don't have to work on every desk to have an opinion on multiple products.
From my limited knowledge having only worked on one desk: - The FXO market is the most developed options market in terms of spectrum of products actively traded by clients and thus the most technical. Significant amount of long dated hedging structures with multiple exotic components etc. I doubt you would see this in Eq Derivs. - Long term rates are where the most spread is - however whether you make significant PL will be solely due to the franchise your bank possesses. Spreads are too wide to prop trade IR options, not sure about swaps or LTFX although I would hazard they are as well. I have no idea where securitized products sit in this respect though. Keep in mind, products with wide spreads and 0 flow = 0 P/L. Ultimately if your desk has a strong franchise then prop-trading will be a bit looser - it helps knowing you'll make money most days even if you suffer on the prop side.
There you go, In terms of people - the simpler the product, the more bro-like the traders which is a very loose generalization. In terms of exit opps - every desk can lead to somewhere on the buy side or some sort treasury/balance sheet management job. I would say the most important aspect is a profitable (and certifiable) track record and/or a top-tier name. P/L is the most credible indicator after all, but finding a seat that lets you try what you want is difficult.
Spreads are declining across every market except it would appear long term rates and related products. Some banks have captive client bases they can charge a premium to for credit reasons but generally spreads are declining.
I do it because I like it, not for any other reason. Trading is mentally challenging and the hours quite reasonable, I have no problem focussing on very few niche yet technical skills and pigeon holing myself. I'll worry about things later if I am unsatisfied - I accept my prospects are not as bright as they once were, but ultimately I chose this job because I like it.
@"mbavsmfin" http://www.euromoney.com/Article/3338848/Euromoney-FX-survey-2014-resul…
You've got to have no idea what you're talking about to even posit that Goldman comes after DB in FX trading.
Misread, apologies.
Deutsche and Citi are the undisputed powerhouses in the FX world. Citi's FXO desk would probably account for some crazy % of the interbank market.
My 2 cents regarding American desks, I haven't worked in all these areas so caveat emptor (although I have worked in a couple):
Cash equity: closest to the old-school, relationship business so plenty of drinking and outgoing people, margins can't really get that much tighter but there might be room to trim down on the last remaining traders and some salespeople. Go there only if you know how to program in C++. Not much money to make. Best places: GS, MS
Equity derivs: Much more cerebral than cash, engineers and PhDs aplenty. Desks are doing pretty well now, maybe even a little hiring going on. Long hours relative to cash. Quieter in exotics than in flow derivs/vanilla options. Best places: Exotics: BNP, SocGen (I kid you not), CS; Flow derivs: GS, CS
FICC
Swaps (IRS): Was a money machine a couple of years ago, but we are headed to Dodd-Frank and margins will be crushed with a ton more work to do over every trade, and a bunch of customers will simply pull out of the market. Flow-ish culture particularly at the big shops but it could be short-lived. Was the place to be, now it's 50/50. Best places: JPM, the other big flow houses
Government (bonds and agencies): Treasuries loud and old-school, slightly more Ivy League proliferation. Decent place to be as it won't go away. Agencies more cerebral and tough to manage books. Best places: US flow houses
Rates options: Halfway house between bros in flow and PhDs in exotics, sometimes considered a good balance. The market isn't what it used to be, less $ to be made, but not as crushed with regulation as stuff that's becoming cleared... Best places: Ermm not sure..
Rates Exotics: All firms much of a muchness these days, most got blown up in 2008, all desks have shrunk to a handful of people and some have disappeared (almost) entirely. It's a product where models tell both sides of the trade that they're making money and in the end one (or both) will get smoked. Fairly cerebral, longer hours. Still a decent job if you can get it though because there are so few people left that the remainders have monopoly power... Best places: Nobody really stands out these days tbh
Mortgages: You have to be a bit smarter in this biz, and there's more money to be had working on any book which is negatively convex because you can blame tough hedging conditions to charge more. Decent job if you can get it, but make sure it's at a good shop because you can never be sure if it's the biz which is getting the chop if you're at a place where it's small and peripheral. Best places: CS, BAML
Corp bonds / Credit: More akin to cash equity in terms of volume, smart people but also street-smart. Tougher to hold inventory will probably mean wider margins but there's still a risk that this stuff disappears onto electronic systems and exchanges in the midterm. Best places: US flow houses
Munis: I don't know much about 'em, depends whether you're doing flow or deriv but I guess that cross is similar to the above mixtures Best places: The US flow monsters
Spot FX: Loud and street-smart. Less and less money to be had as the algos take control, and big fines in the short term will smash comp. Still, this market will be around forever. Best places: Citi, DB
FX derivs: More akin to equity derivs, book-smart, and still money to be made. Expect to program, probably won't go away in the mid term. Best places: DB, Citi, Barclays?
One last thing, don't take a job based on exit opportunities. I've never understood the American school obsession with doing this... You'll make your life miserable in the hope of jumping to something which you don't know for sure is less miserable. Let me know if I missed something important, sorry for the brain-dump.
I thought it was JPM and BAML for mortgages but then again I could be biased... Great post overall though thank you. Exactly the sort of thing I was looking for when I made this thread.
Yes JPM is strong across the board.. Their swaps desk in 2010 made obscene money. Having said that, CS has been the shizzle in mortgages since First Boston, so you can never leave them out of this ranking. By the way, I was including CMOs, derivs etc
I'd add JP, BAML, maybe MS to the list of flow eq derivs players...not so sure GS is top there either but could be off-base. Great overview though.
+1
Oh right I forgot commodities. Well, out of sight out of mind... If you don't work with them, don't think you can understand them, so I'm not in a position to comment. All I can say is that they're extremely volatile both in PnL and in which firms want to be in them. So make sure you're at a firm where the commodities desk is the jewel in the crown otherwise you could be thrown out onto the street as has happened at a lot of places recently. Best places: MS, GS
@NamelessOne: How about High Yield/Distressed Corporates?
Right, HY is slightly different to IG corps in mentality. Towards the more cerebral and humble end because their books move more. But on the grand spectrum they're not as quanty as any derivatives desks. Definitely still money to be made while trading stays OTC, and a better ROE than some other desks. Still, the market has been hot for so long you feel something must be coming to the downside.. Players: BAML, JPM
Wanted to bump this - anyone have thoughts on BB electronic desks? I am specifically referencing the sales seats.
don't think the name matters in trading... i've seen some real good traders from a very small French bank and Credit Suisse guys are pretty good too...i'm talking FX options here.. as long as you are allowed to "choose your side "(which is pretty difficult for big banks like GS or Citi where they have client flows every minute so that they spend their entire time setting up an auto-hedge system or arguing with stupid and clueless sales for 1 bp or 1% vol )
So so true.. many option traders don't know the fundamentals of their asset classes and got buried in either the "perfect hedges" or the obsession to front run the rest of the market
Not a fan of this opinion tbh. A good sales guy is incredibly valuable to a trader. Any experienced trader at a top BB knows that his sales guy is his number 1 asset, he'll make or break you. He's the guy who will protect you from getting picked off or run over and his experience and insight into his clients is crucial to how you price trades and manage risk. Some traders look down on sales people but the best ones know their value. Also 1 vol in FX options is pretty big
Soc Gen isn't even a BB but their electronic trading technology was top tier, at least it was a few years back when it was basically poached/stolen to Tower (who is a very strong player in HFT).
Didn't know CS was a big player in mortgages. I spent some time on a mortgage desk and from what I inferred from speaking to people and looking at the rankings, it goes Citi, JPM, BAML as the big 3
CS has a huge mortgage desk...they take some of the biggest risks in the firm
was just wondering, which desks are most profitable/still going to be around for some time. Was thinking of going fx options vs equity derivs as i'm quite a quantitative person (but not good enough to be a quant). However, i'm scared that fx options is going to be automated etc.
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