RBC sets up new forex prop desk

Royal Bank of Canada (RBC) set up a new foreign exchange proprietary trading group last week in an attempt to steal a march on its competitors, according to RiskNews’ sister publication FX Week .

Former co-head of forex sales and trading in London, Keith Dack, has been appointed to lead the new proprietary trading strategy, said David Gibbins, global head of forex at RBC Capital Markets in Toronto. "Keith is the ideal person to lead this initiative and we’re fortunate to be able to draw on his solid experience and excellent reputation as a proprietary trader," he added.

While traders at RBC in London can currently take "proprietary positions that comply with established risk and exposure parameters", said Gibbins, this move intends to "gain a competitive advantage by co-ordinating this business on a global basis". He said that the nature and structure of the new proprietary business would be finalised in the coming weeks.

Now is a particularly good time for the bank to capitalise on proprietary trading, said Dack. "People have increasingly turned to currencies for opportunities over the past two years following lower yields in the equities and fixed-income markets, and many macro hedge funds have been set up to take advantage of these opportunities. We expect these trends to continue and this is a good time for us to get involved."

Mark Allen, former co-head of forex sales and trading alongside Dack, now takes on sole responsibility for the bank’s European forex business. This involves taking on the sales business, which was previously managed primarily by Dack. As a result, head of continental European forex sales Francois Heritier, head of UK institutional forex sales Kris Dickinson and Marshall Bailey, who manages global central bank sales, now all report directly to Allen.

Dack, who remains in London, becomes deputy to Allen in forex sales to allow him to focus primarily on RBC’s expanding proprietary business, said Gibbins. "Although his involvement in the sales side of the business will diminish, Keith will continue to work with some of our most important clients and we will continue to draw on his expertise as deputy to Allen."