[HELP] A Big Decision: OTC Clearing vs Cash Equity Sales Trading
2020 BB SA here, received and accepted return offer.
I was offered the choice between a position on two of the teams I rotated with: cash Equities Sales Trading and OTC Derivatives Clearing Sales in the Prime division. I ended up going with the latter, but am still wrestling with this decision. I'm wondering what you all think. Here are my haphazardly organized thoughts.
Cash Equity Sales Trading - Pro/Con
- Flow side, so very early mornings but everyone is out by 6 PM.
- Extremely dynamic and fast-paced. Very traditional S&T.
- An understanding of the markets, current events, and the business world are a major part of the day-to-day.
- It's FUN! Maybe this is just me, but I really enjoyed being so close to the market.
- Decent career opportunities outside of S&T - I could be an execution trader at an HF or maybe even break into PE.
But.....
- Cash Equities is dying on the sell-side. Headcount has halved twice in the last 15 years.
- Poor career prospects and pay is likely to decrease over time.
- I wasn't that big of a fan of some people on the team - many are deluded about the future of the industry and I had to nod along to their rants about how AI in trading was 'just a phase'.
OTC Clearing - Pro/Con
- Business is exploding, and will continue to do so. Per person revenue is in the millions.
- Strong career prospects. There are simply very few institutions with the caliber to enter this arena - building an electronic trading platform to clear derivatives is not something feasible for MM banks or app developers. (i.e. business can't be destroyed by Robinhood-style startups).
- Working closely with clients, and develop proprietary systems for platinum clients, also seems fun.
- By clearing trades and mitigating counter-party risk, we're making markets safer, less volatile, and more sustainable.
- Close cooperation with regulators - we can have a real impact on regulation.
But...
- Most of your first few years are spent doing work other people don't want to do.
- High-level stuff - the spiel about making markets safer, working directly with regulators, developing proprietary systems for platinum clients, is not something you feel on a day-to-day basis.
- I'm honestly just not sure how exciting this is over time- while platform-based business models are undoubtedly the future of S&T, will I get burned out?
- Very few career opportunities outside of S&T. If I get burned out, I have absolutely 0 transferrable skills.
These are my thoughts, but it would be great to hear what you all think.
It all depends on what you want to do and what interests you within S&T. It is true that cash equities is a dying business, but it is still S&T.
OTC Clearing isn't even close to traditional S&T. You sell a platform. You're a marketer (At least that's what they call it where I work; not even sales). We have traders, sales traders, quants, or marketers. The latter applies to the OTC clearing folks. Second, that business is driven mostly by regulation, so it isn't an 'exploding' business. Especially considering the fact that there are less players (HFs and the like).
The analysts that I've met that work in OTC clearing don't want to be there. Why? Because it isn't pure sales or trading in the context of traditional S&T. And comp doesn't really compare. It is definitely lower.
Also, I think it sounds good on paper to say that you're working with regulators and you can 'have an impact on regulation' but it doesn't work like that. It's boring work, very nuance, and boils down to endless back and forth chains of emails. That sounds like something you say in an interview. But be real with yourself. If you REALLY like that, go to Law school.
But I don't want to discourage you. If you like it, you like it. But think well and hard about why you chose S&T. I feel like a career there can get very boring, very quick.
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I’m not knowledgeable enough to give a solid opinion on the matter.
Following this thread for further information.
I too got an offer for a role similar to equities sales trading at a BB, but on the electronic execution side. From what I’ve seen so far, Cash Equities is definitely a dying business. The banks don’t really care much about it, unlike FICC.
However, it’s still S&T. It’ll always give better pay, exit opps, versatility and career longevity, compared to OTC Clearing or any regulatory or MO/BO job. But if you liked the latter, definitely go for it.
Happy to hear what the more experienced folks have to say.
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