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Based on the most helpful WSO content, here’s a breakdown of your situation:

Sell-Side Sales & Trading (BB Bank)

Pros: 1. Career Certainty & Job Security: BB banks offer structured career paths, better job security, and a more stable environment compared to prop firms. This is especially true for graduate positions, as opposed to internships. 2. Reputation & Networking: Working at a BB bank adds significant prestige to your resume, which can open doors to other opportunities in finance. The networking opportunities are also stronger in a BB environment. 3. Team & Culture: You’ve mentioned you get along well with the team, which is a big plus for long-term job satisfaction. 4. Defined Role: While you may be pigeonholed into a single asset class, this specialization can help you build deep expertise in a specific area.

Cons: 1. Lower Pay: Starting salaries and bonuses at BB banks are generally lower than at prop firms. 2. Limited Upside: The upside in terms of compensation and career progression may not match the potential of a successful prop trading career. 3. Uncertainty About Fit: If you’re unsure about trading as a long-term career, this could be a risk.

Prop Trading Firm (Fundamental Research Internship)

Pros: 1. Higher Pay & Better Hours: Prop firms typically offer higher starting salaries and better work-life balance compared to BB banks. 2. Flexibility Across Asset Classes: The ability to move into different asset classes as a fundamental researcher is a unique advantage. 3. Potential to Trade Your Own Book: While your primary role would be research, the opportunity to trade your own book could provide significant upside if you’re successful. 4. Skillset Alignment: If you feel the research role better suits your skills, you may find the work more fulfilling and engaging.

Cons: 1. Internship Uncertainty: There’s no guarantee of a return offer, which adds a layer of risk to this option. 2. Role Relevance: As you mentioned, the fundamental research role in prop shops is relatively new and may evolve or diminish in relevance over time. 3. Limited Trading Focus: If you’re interested in trading as the main part of your job, this role may not fully align with your long-term goals.

Key Considerations

1. Risk Tolerance: If you value stability and a clear career path, the BB role is the safer choice. If you’re willing to take on more risk for potentially higher rewards, the prop firm internship could be worth pursuing.
2. Long-Term Goals: Consider where you see yourself in 5-10 years. If you’re drawn to trading and the potential for high bonuses, the BB role might be a better fit. If you’re more interested in research and flexibility, the prop firm could be the way to go.
3. Exit Opportunities: BB roles generally offer better exit opportunities into other areas of finance, such as hedge funds or private equity. Prop firms, on the other hand, may limit your options to other trading or research roles.

Recommendation

If you’re risk-averse and value stability, the BB trading role is the better option. It provides a strong foundation, career certainty, and networking opportunities. However, if you’re confident in your research skills and willing to take on the risk of an internship with no guaranteed return offer, the prop firm could offer higher pay, better hours, and more flexibility in the short term.

Ultimately, it comes down to your risk tolerance, long-term career goals, and how much you value the certainty of a graduate position versus the potential upside of the prop firm internship.

Sources: Why choose Sales and Trading over Investment Banking?, Advice for a 21-year-old entering BB S&T?, Prop Trading (MM) v.s. BB Sales and Trading, Q&A: Equity Derivatives S&T, Why pick S&T over Prop trading?