
Former JP Morgan Chase fund trio make £55m
They are the most profitable example of a common trend of the past two years: traders leaving banking jobs to set up currency and fixed-income hedge funds.
Reports of such stellar returns make it harder for banks to keep hold of their proprietary traders, who are increasingly leaving banks’ trading desks for the lucrative world of hedge fund management.
LDFM started with $1 billion under management, much of which came from JP Morgan Chase, where the directors managed the fund in-house before it was spun-off in 2002.
About 85% of hedge funds start out in this manner, estimated one trading manager at a bank in London. But the growing popularity of currency hedge funds means it is becoming more of a problem for banks’ prop foreign exchange desks.
Putting capital into a hedge fund set up by departing staff is one way that banks are dealing with this problem: by doing so, they are effectively outsourcing their prop desk -- and risk - to an external group. But banks may also have to start considering a return to the traditional pay structure for prop traders - a 10% share of their takings - rather than paying guaranteed bonuses to combat the lure of the buy side, said one ex-trader in London.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Market blocked in by volume caps on European DLT regime
Limited scope of pilot project risks holding back issuer and depository participation
SVB opens floodgates on liquidity buffers debate
European regulator says HQLAs should be booked at fair value, but not everyone agrees
SEC cyber rules risk creating web of confusion and costs
Proposals would require breach notifications, public disclosures and annual cyber assessments
Indonesia readies close-out netting after passing P2SK Law
Bankruptcy law changes remove close-out netting obstacles
Top 10 operational risks: The umpire strikes back
Tougher regulatory enforcement, new consumer rules and rise of ESG are ringing alarm bells
Behnam comments fan JSCC hopes for US client clearing
Japan clearing exec welcomes CFTC chair’s pledge to keep discussing OTC clearing status for non-US houses
SVB wouldn’t happen in Europe, says Deutsche CIB head
Campelli also thinks Credit Suisse’s bailed-in AT1 bonds acted as originally intended