Sales and Trading Best Desks

Hey Guys,

Pretty standard thread... Incoming summer analyst at BB and am wondering the best desks, specifically for trading. I am aware that the answers may depend bank to bank, but I am specifically interested in trading and eventually moving to the buy-side. Generally speaking, what are the best sell-side desks to set you up for a career on the buy-side (hedge fund)?

Thanks all.

Comments (29)

7y
Gcredit, what's your opinion? Comment below:

^ Most MBS guys I know are still stuck on the sell-side and doing okay overall. Decent spreads and comp. But I've certainly seen structuring analysts move to buy-side. It's one of those areas where you can leave sell-side even when you're associate or VP level unlike standard 2 years IBD to buy-side PE or HF route.

If you're doing structuring you're more valuable. A structure can trade but a trader can't always structure. Buy-side guys investing need quants (or almost) to make deals. I know this only through a few people on the buy-side but please confirm on the floor you work on as well.

7y
emcrates, what's your opinion? Comment below:

My take from reading on here and speaking to traders is that it is much harder to get onto the buy-side as a trader mainly due to the lack of prop desks. I am interning this summer as well and the first question I asked when picking my desk is the ratio of flow:prop (after picking which teams I got on with)

You can always play it safe and rotate on a EU rates desk in Europe or US Sovereign Debt desk in US as they are exempt from Volcker rule in the US and the prop trading ban in Europe (2017). But you will be limited to cash markets.

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7y
Gcredit, what's your opinion? Comment below:

Just to add, one thing I missed is (only realised after reading above post) is that yes you can do MBS on other ABS trading on the buy-side. The reason I focused on structuring is because these guys tend to become PM's. But easier to get in with sell-side experience if you are going to be an execution trader.

Some funds have hired MBS traders btw in the past and not just for execution. One guy did a record (no clue how) at Brevan with some 100 mil if I remember correctly. He was mentioned on WSO earlier as well.

7y
Anonymoose, what's your opinion? Comment below:

Yeah I'm pretty sure it's not that difficult for MBS guys to move to the buyside but it's very niche. Like there's a lot of demand for MBS traders because it's not like they're going to be taking bankers to work at a MBS/ABS focused fund so I would imagine it's not that difficult to get into a fund that focuses on securitized products. I imagine it's more difficult to get into something like distressed debt or global macro or L/S equity (although global macro might be the easiest of the three if you trade a really liquid MBS product like TBAs).

7y
whalesquid123, what's your opinion? Comment below:
Gcredit:

Just to add, one thing I missed is (only realised after reading above post) is that yes you can do MBS on other ABS trading on the buy-side. The reason I focused on structuring is because these guys tend to become PM's. But easier to get in with sell-side experience if you are going to be an execution trader.

Some funds have hired MBS traders btw in the past and not just for execution. One guy did a record (no clue how) at Brevan with some 100 mil if I remember correctly. He was mentioned on WSO earlier as well.

I remember the guys name, wonder whether he ended up being worth that big guarantee to bh. Well at least I haven't read anything that says he got fired, so he must be doing ok

7y
Ialpha, what's your opinion? Comment below:
whalesquid123:

I remember the guys name, wonder whether he ended up being worth that big guarantee to bh. Well at least I haven't read anything that says he got fired, so he must be doing ok

Aint about the guarantee. One year. One P&L number. Your year end bonus accordingly, in most cases.

Next year may be a bit difficult and in the first three months they may sack the guy with no regrets really.

If you look carefully you will find a lot of people who managed to stay there just 2-3 years. Even then they say it's a good span in such firms because it means you've done well in your first and second year (implying already made good money for yourself through bonus)

7y
TraderDaily, what's your opinion? Comment below:

Sell-side means you're working at a dealer i.e. bank and selling securities to the institutional client. Buy side means you work for the institutional client, i.e. hedge fund, mutual fund, etc.

7y
Anonymoose, what's your opinion? Comment below:

Sell side traders work at Investment Banks and make markets for clients. Buyside traders are at hedge funds, mutual funds, etc.

Buy side trader calls sell side trader and says "Hey where are you on X bond" and sell side trader thinks about it and says "I'll sell X bond for 101 or I'll buy it from you at 99" and then if the buy-side trader likes the price he buys it from the sell side trader and the sell-side trader then tries to cover the short and make money on the difference. Buy-side people are managing clients money and placing directional bets on stuff, sell-side traders are trying to profit on the difference between the bid price and the ask price.

7y
Gcredit, what's your opinion? Comment below:

Best guess would be base larger than MS in NY (where he worked alongside a good friend of mine) but bonus far more upside based on P&L. No free lunch and guaranteed money in such places, but never worked there so don't know. Funny I'm just making a guess, can easily ask a mentor/friend who knows this guy very well.

Banks can't match HF bonus promises in most cases. There are situations where people just feel 2-3 good years on buy-side will be just enough to retire.

Best Response
7y
derivstrading, what's your opinion? Comment below:

If your sole purpose in life is to move to the buyside then its obvious but as others have stated its about what you want to do on the buyside.

Fundamental equity: actually not a lot of S&T spots prep you for this that well. THat is why for a lot of fund. equity roles you see people coming from research (most of these have some sort of trading background at some point as any buyside firm finds it difficult to hire someone with solely an ER background on the sellside), and even more from IBD/PE. You just dont build fundamental valuation knowledge trading equity derivatives.

Fundamental credit: HY credit and distressed desk best for this. The benefits of this are that most HY desks have research and trading as one team, and so you get exposed to all aspects of it.

Macro: as said above best to do something in rates, its the fundamental building blocks of finance and is probably a great education.

Then there are a bunch of specialized things, like MBS/ABS funds described above, but I wouldnt be going in to MBS on the sell side thinking I am going to the buyside after 2 years. WIth these specialized securitized/exotic strategies it heavily depends on luck/market timing/finding a fund with an opening etc. Its not like theres tons of these funds out there.

The desks which are trickier to transition from to the buyside are stuff like equity derivatives trading. The reason being is that you would think the natural transition is to a vol arb fund, but tbh those are mostly statistically/quant driven and dont really require a sell side vol trader outside of an execution role. There arent that many discretionary vol funds.

7y
qs344, what's your opinion? Comment below:

Hey derivs, thanks for the insight- I'm gonna be a sell-side vol trader myself, are there better discretionary vol opportunities at large prop firms as opposed to HFs? Also, can sell-side vol traders transition into convertible arb funds well, since those seem to be more on the discretionary side (correct me if I'm wrong)?

7y
derivstrading, what's your opinion? Comment below:

I mean dont get me wrong, there are opportunities but just not as many as for a fundamental guy (as long as you are talking about purely discretionary and not just an execution guy for a black box strat).

In terms of prop trading firms, its a slightly different way of trading (as in prop shops are sort of the scalpers of the market), the prop game is much more about speed and small margins and picking up nickels throughout the day. I still would have thought you could make the transition skillwise, but for whatever reason the transition just isnt made too often. I have never seen a vol sell side guy go to the likes of Optiver or tibra (altho im sure it happens). My guess is that the prop shops like to train their own.

In terms of moving to convertible arb funds, its doable (its what I did actually), but its not a smooth jump. As far as my transition, it was definitely taking a step back to take 2 steps forward kind of thing. I had my own book on the sell side, but its not like i came in being in charge of risk with convertibles, as it is a whole different beast. Theres a huge amount to learn as theres a lot of what i call "prospectus risk", theres credit risk so you need to get up to speed on fundamental analysis (which you dont learn as a sell side vol trader), and theres learning to trade CDS etc etc. Its not impossible, but its not like you can be a BSD vol trader and then just jump to bieng a PM on a CB desk at an HF. That is why I decided to make the jump quite early, because I could see myself getting into a pigeon hole.

7y
Anihilist, what's your opinion? Comment below:

Distressed, though I think that group is typically very hard or even impossible for undergrads to get into for FT.

People demand freedom of speech as a compensation for freedom of thought which they seldom use.
4y
LaNoob, what's your opinion? Comment below:

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7y
glen ross, what's your opinion? Comment below:

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