Thoughts on VCMT (Dare) and Onyx
Hey all,
Was wondering if I could get some thoughts on getting offers from either of the two firms up top.
I understand that both firms are mainly market makers in the energy derivatives trading but with little to no physical presence. Would this be considered a disadvantage especially at the start of your career out of undergrad, and also what are some exit opps I'd be looking at in the next 5-10 years.
The idea of being able to be trading extremely quickly and promoted to head of desk within 1-2 years is a huge aappeal to me.
from one friend at a supermajor and another at a big energy prop firm, I've heard a decent amount of bad rep regarding VCMT - apparently a very unpleasant culture, less learning opportunity and run by one guy with a very large ego which is not a combo you'd want. Take them if you have no alternatives, but make sure you suss things out properly if you have other offers! Gl :)
As mentioned before, VCMT has a not-so-friendly culture, which I guess comes as part of the deal when you are in such a high-stakes environment. And yes, you can become head of desk in 1-2 years, but that's because you work 6am to 10pm trading all markets rather than standard trading hours. Hope that helps somewhat.
If I'm willing to put the work in and grind out those hours, would it make the sacrifice worth it then?
Well, that's the decision you have to make. Personally I thought it wasn't worth it and took an offer at an IB in S&T. But if you are set on being a energy trader + have thick skin to thrive in that environment, I expect you will learn a lot and have way more exposure to markets compared to someone who goes to a regular oil firm who won't really make any trades/PnL until 2-3 years in. Again, I've never worked there so just my 2cents and may be worth asking others before deciding too.
Appreciate am probably late to the party here, but wanted to add my two cents
Onyx, at this point in time, seem to be doing better - they've just opened an office in Singapore, I'm lead to believe
Dare (formerly Vercer, or VCMT) has the reputation of a brutal culture, however I understand the two co-founders have stepped away from running desks themselves (likely because, as Bloomberg reports, they're allegedly being investigated by the DoJ for market manipulation)
The skills you learn at either firm won't be scaleable in the sense of transitioning after 5yrs or so to a bank / fund / major / trading house
The reason for this is that, as market makers, their primary means of providing liquidity is arbing across curve structures in order to exploit small, 25-50 cent inefficiencies in order to attain profit - you'll likely learn little about interpreting physical flows, understanding premia dynamics, or the impact of the underlying macroeconomic landscape
From these firms you can exit to market makers like optiver/sig/js…?
Not to seem so pessimistic about the whole situation, but unlikely
The market making of Dare, Onyx, Mandara, and the like are solely focused on delta-one products: namely, timespreads and arbs (incl. cracks, EW, etc.)
Optiver, TwoSigma, and Jane Street are: i) Much more quantitative (the specialties of Dare, etc. lie in OTC, voice-traded markets, whereas Op / TS / JS will to a larger extent be exchange traded [read: on screen] and algorithmically driven); and ii) Will also involve more nuanced derivative products (such as options)
Hi! I’d really like to hear more about why the skills wouldn’t transfer across to a fund/bank trading seat. Would you be willing to have a chat about this and PM me?
Not to seem so pessimistic about the whole situation, but unlikely
The market making of Dare, Onyx, Mandara, and the like are solely focused on delta-one products: namely, timespreads and arbs (incl. cracks, EW, etc.)
Optiver, TwoSigma, and Jane Street are: i) Much more quantitative (the specialties of Dare, etc. lie in OTC, voice-traded markets, whereas Op / TS / JS will to a larger extent be exchange traded [read: on screen] and algorithmically driven); and ii) Will also involve more nuanced derivative products (such as options)
hey man, I really want to get into Energy Trading, can we may be connect over pm for the same?
Apologies for the slow reply - feel free to d.m. me with any questions
Hope you're doing well
Are there any firms a level under them 3 that if I did 2-3 years as a trader would help get me into them more quantitative firms ?
Onyx EOY financials are out and for a shop employing 65 people during ‘22 £65MM net profit is impressive.
£5-600k average pay per head according to the report too…
Mind linking me to their EoY results, please?
I don't doubt it's impressive, and a few people have undoubtedly done very well indeed
My question, however, pertains to new joiners: what do they have to gain?
Perhaps I'm being ignorant, but a firm that's captured the market share it seemingly has from market-making, with the personnel it already has on board, is now playing a defensive game
It's a competitive space, and you'd rather keep someone that makes $20m per year,and pay them $2m of that in that current role, than shunt said book-head into a new field in the hopes they can apply their alleged talent while leaving a formerly revenue-reliable business unit to an understudy, who could perhaps be a better (and more hungry?) guinea pig
This, I think, explains a lot of this sort of shop's expansion into other business areas - consultancy (i.e. hedging advice), broking (i.e. using flow to inform views / leverage as a hedge against in-house positions), money management (i.e. using the capital of other firms to either affirm leverage [perhaps affiliated with the broking business], else apply the same scalping strategy in larger size, and eek a given percentage of performance-related return excl. drawdown), etc.
The game plan now is to keep the competent desk leaders onboard, remunerate them commensurately with performance, and use new hires to test fresh markets
In the event they (the new hires) fail, it's a relatively low expenditure for an exercise that reaps huge informational feedback; in the event they succeed, it's a savvy investment, providing an "in" to new, inefficient (read: exploitable) markets
You can see this already from DV - a historically hydrocarbon focused firm
They've hired metals traders, albeit with management (perhaps) lacking the understanding that most metals (bar, arguably, copper and [to a much lesser extent] aluminium) are prohibitive in nature to arb across forward curves in the same manner as you do refined energy products... They're gonna have to take a lot more spec risk (either directionally [whether through flatprice or options] or via spreads and arb [such as LME vs SHFE]), which I'm not entirely sure they're fully comfortable doing
It will be interesting to see how it develops, but: i) The approach will need reforming / tolerance; and ii) Risk tolerance / spec appetite will need to be increased
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