Bulge-Bracket S&T vs Boutique Prop Shops

I just got a summer analyst position at a BB bank and I'm extremely happy with the position. But I was wondering how it compares with smaller prop shops in terms of comp and lifestyle. I know, for example, a first-year at Optiver can make 300k. And this is in Chicago, where the cost of living is half that of NY. When you compare it to a BB first-year analyst, I don't imagine they break 120k even in NY in their first year.
I've also been told that the lifestyle at these smaller firms is great, not just for work-life balance, but the facilities in the office.
Can anyone make an argument for a BB S&T position over one of these smaller firms, as in, would there be a reason for someone to choose a BB S&T position over a firm like Optiver, or do they only take BB S&T positions because that's the best that they can get?
Another reason might be because of their academic background - smaller prop shops are usually very quantitative, and a lot of people going into S&T might have more of a less quantitative background - for instance, I saw people going into the same position as I am this summer doing psychology, finance, etc. but people at Optiver take Math, Statistics as majors - I'm majoring in Math at UChicago and didn't see a lot of people with a similar background at BBs but I did in smaller prop shops.

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Comments (13)

Most Helpful
Feb 25, 2019 - 10:49pm

Prop firms run relatively lean by headcount so they can trickle down more of the PnL to junior employees. There's also quite a bit of turnover in the prop world (whether it's from your own poor performance or your firm blowing up), so you could say that they are being compensated more for their additional lifestyle risk. Compensation itself is highly volatile as well, whereas MDs at banks probably consistently pull down high 6 - low 7 figure comp while analysts/associates get shafted.

BBs have a huge amount of variance in terms of competency/reputation of a given team so you can't really discuss them without going into useless vague terms. Banks do get into more weird/lucrative stuff like swaps and other derivatives, and they basically run the FX world.

tl;dr go to a prop firm if you want to buy a call option on yourself

Feb 26, 2019 - 1:36am

Personally, I think top prop (e.g., Optiver/5 rings) > BB S&T > other prop (Belvedere, etc.).

If I had to make an argument for BB S&T over a top prop firm... the risk/reward is just different. Prop is a lot of risk, people get cut fast (S&T, you have 1-3 years to learn before trading a main book for the desk. There's an argument to be made for lower comp early on in exchange for training/stability. Some places even let you try multiple products as an analyst. Also, banks do stuff prop shops won't/can't (see below).

Agreed with CAPM Arbitrage about variance in the bank world. You have to do more research on your bank to see what it's good at. But the moat banks have in OTC products is understated... they service a broad client base, and there are some lucrative areas (structuring, exotics, credit, EM) not available in the prop world.

Would also say BB guys have more opportunities to go HF if you're interested in that.

Regarding majors, understand the S in S&T is Sales. There's a mix of backgrounds, but that doesn't change the opportunity set. You will be competing with plenty of quanty people for the trading seats don't worry lol..

Mar 2, 2019 - 2:02am

Prop shops are generally better gigs and they pay more. If you can get those jobs, go nuts - they're also more selective.

My understanding is that they basically only trade equities, though. If you want to trade credit or rates or EMFX or whatever, you have to start at a bank unless you luck straight into a fund.

But you shouldn't want to trade different things so badly that you'd make 1/3 the money to work in a giant bureaucracy, so yeah, prop shop still a better gig for a 23 year old if you can get it.

If you're happy, you're happy. There's always going to be someone with a better job, a fatter wallet and a hotter wife.

Mar 15, 2021 - 1:01am

I don't think this is entirely true - In the non-HFT space, I would actually say cash equities are not a super popular product at prop shops. Many of the big names listed above (optiver / 5rings) primarily deal in derivatives market making as their meat and potatoes revenue source. Other firms (that are incredible to work for) specialize in specific niches. For example, Headlands does a ton of muni market making and makes out like bandits.

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  • Junior Trader in PropTrad
Jan 14, 2021 - 1:19pm

Bump on this thread, what would people say the rough ordering of these prop and S&T options would be for a new college graduate (I'm sure risk tolerance plays a factor):

Prop: Jane Street, Citadel Securities, Optiver, Five Rings, SIG, IMC, DRW, Virtu, Old Mission, Akuna, Belvedere, Wolverine, TMG, Group One, PEAK6

S&T: good desks at GS, MS, JPM, okay desks at GS/MS/JPM, good desks at Citi/CS/BAML, okay desks at Citi/CS/BAML, assorted desks at other BBs like DB, Wells Fargo, and so on.

Basically what order would you rank these trading positions, including both prop and sellside?

  • Junior Trader in PropTrad
Jan 14, 2021 - 1:36pm


I would take a good desk at Citi over a meh desk at other banks any day

I wasn't ranking any of the positions.

Not disagreeing with taking a good desk at Citi over a meh desk at GS/MS/JPM. How would you rank the options listed?

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