Securing a graduate trading role in an investment bank is increasingly difficult; job numbers are falling, competition is intensifying and an increasing number of front office roles are going to internship conversions. Now is the time to think about expanding your options, and possibly pursuing further education to stand out from the crowd. Can this new Masters degree in proprietary trading really help?
Futex, a proprietary trading firm based in Woking, has teamed up with the University of Hertfordshire to offer the first MSc in Proprietary Trading. The idea is to spend 12 weeks working on the firm’s trading floor, followed by a 14-week module on financial markets, then another 14 weeks learning about the global economy before writing a dissertation to conclude the year-long course.
Like most Masters degrees, it’s not a cheap option – tuition fees are £16k – so students should be keen to ensure that their employment prospects are really bolstered. David Dukes, a director at Futex Investment and Trading Academy, says the MSc is viewed very much as a recruitment tool.
“We’re taking on 40 students this year for the MSc in Proprietary Trading and, while the focus is on recruiting them on merit, we’d expect the majority of graduates to be extended an offer,” he says. “We recruit graduates throughout the year, but we’d expect the Masters students to be the cream of the crop.”
There’s been more interest in prop trading companies like Futex than ever, as the larger financial institutions have pulled back from graduate recruitment, says Dukes. They receive “around 200 CVs a week” for their graduate training programme and for the first intake of 20 MSc students that started in October, 650 people applied.
There are some benefits to this degree. For a start, as the course is in response to the UK government’s push for “corporate” degrees that aim to equip students with practical workplace skills, graduates will spend time in a high-pressured trading environment, with real traders, learning the business.
However, there are some things to bear in mind. Firstly, Futex already runs a graduate trainee and apprenticeship scheme, both of which offer the 12-weeks trading experience at no cost.
Dukes argues that the MSc in Proprietary Trading students will “have the edge” over other applicants in the long run: “Academics – such as data interpretation and economic knowledge – are increasingly required to stay ahead of the competition on the trading floor,” he says.
What’s more, while most financial services organisations offer their graduates competitive base salaries from the outset, prop trading firms like Futex work entirely on commission. Investment banks trade on behalf of their clients, while prop trading firms use their own money. As a graduate trainee, you’ll be offered £500 a month to cover expenses, but any other income will be dependent on the profits you bring in.
The company takes on the risk for you, but trading profits are split 50-50 split with your employer. As the size of the account you work on increases, this commission ratio benefits the employee until it’s possible to take home 90% of trading profits. “On a good day, it’s possible to earn six figures,” insists Duke.
There’s already no shortage of Masters degrees focused on the financial sector and, as we’ve pointed to previously, the better universities have traditionally been a pipeline for investment banks’ graduate schemes.
If you don’t secure a position a Futex through the prop trading MSc, your alternatives are may be limited and even if you are successful, the course is unlikely to get you into an investment bank. Dukes admits the course is not really aimed at students who want to work in investment banking: “Other prop trading firms will likely be interested in students who we don’t take on and another obvious alternative is to work for a brokerage firm.”