Is S&T dying? COVID-19 impacts
This is has been asked multiple times before, but is S&T dying as much as everyone says? Is it a good place to start a career? Which desks are good and which ones should people avoid? How will COVID-19 impact S&T? Will we see more downsizing? Will COVID-19 accelerate headcount downsizing despite increased volumes?
Probably biased but I don't think it's dying at all. Tech was supposed to replace people by now and even if teams are much smaller, they are still around. Covid was more of an opportunity for S&T really. As mentionned, flow desks are probably not the best place to start today, I would recommend exo/structured desks but you still learn a lot anyway if you are curious and put in the efforts. Only advice is that you probably want to be working for a BB if you're in S&T.
Been on the sell side for 3 years and here are my views:
1) Its dying for sure- the general trend is toward more automation not just front office, but MO and BO stuff as well- you'd be shocked at how many mundane, simple tasks still require humans to do, meaning there is a lot of room for automation and therefore headcount reduction. This trend is quite hard to stop due to the ongoing cost cutting that all banks are undergoing. There will still be a need for humans, but most of the people on the trading floor will be quanty or at least people who can program well.
2) Exotic products are better in the sense that general spread charge is wider/less automatable but you'd be surprised at how many seemingly complex products like options and barrier options are now dealable on an electronic platforms. Just 2.5 years ago when i was rotating on a EM credit desk, traders were commenting on how difficult it is to automate their product due to illiqudity etc and just a few months ago they were launching a simple electronic platform for clients to be able to deal bonds electronically.
3) Re covid- If anything, the crisis has proven that even with less headcount, trading desks can generate just as much revenue if not more than in previous years (given the bump in S&T pnls due to market volatility). Also, most banks have 70-80% of traders/sales etc being able to WFH, which has shown that the industry isn't tied to the trading floor (i.e. all that investment/maintenance cost in fancy computers, hoots, infrastructure etc) isn't essential to generate PnL when traders are still getting by fine trading from home.