Indeed, proprietary trading (or "prop trading") desks can generate big profits - or big losses. Last year, Goldman Sachs, which is widely seen as running the mother of all proprietary trading operations, earned $16.3 billion in net revenue from trading for its own account. However, during the same period, JP Morgan's equities trading revenues fell 17 percent after several trades went sour. ABN Amro suffered a reduction in prop trading revenues in 2005, and in November 2004 Commerzbank eliminated its proprietary trading after suffering third quarter losses of $258 million.
Credit Suisse, ABN Amro, Deutsche Bank and Morgan Stanley are among those said to be adding staff in the area. Morgan Stanley has reportedly moved 30 of its asset-backed bond traders, analysts and technology specialists to a new proprietary trading group at the firm's headquarters. It's said to be considering the same strategy in London.
Such enthusiasm is spilling over onto other roles, as all, notably research. "Most firms are now latching onto Goldman's trading mentality, and need researchers to support that," says one recruiter.
For researchers, migrating to the prop desk could be a lucrative option: Jonathan Evans, managing director of the UK search firm Sammons Associates, says it wouldn't be unusual to double compensation. "Instead of sitting in a darkened room generating ideas away from the salespeople and traders, you're immediately identifiable as the person who's created the idea that brought home the bacon," he says. "And you'll be paid for that."
While the researchers supporting prop trading desks are hired externally, recruiters say most actual trading jobs go to internal hires.
"You can move from an analyst or a quant job into a proprietary trading role in another firm," says Bahador Moussa, a consultant at recruiter Huxley Associates. "But it's difficult to make the move from flow trading into proprietary trading unless you do so in your existing firm."
Prop trading candidates face a distinct challenge: Hiring internally allows banks to build their prop trading desks covertly. So it may be necessary to look very, very closely to find the opportunities.