Head of prop trading leaves JP Morgan
Mike Stewart, JP Morgan’s London-based head of proprietary trading, is leaving the firm to set up his own hedge fund called Whard Stewart.
Whard Stewart will be launched in the second quarter of 2012 and will focus on emerging markets. It is expected that members of his existing emerging markets trading team at JP Morgan will join him, according to press reports.
JP Morgan said in 2010 that those working in its proprietary trading team would be transferred to the asset management division, where Stewart was due to manage a new alternatives unit.
The Volcker rule is intended to prohibit US banks from engaging in proprietary trading and also prohibits investment in hedge funds. Although it was due to be enforced on July 21, regulators have admitted that due to issues with the draft version it is unlikely to be implemented until a later date.
The rule has been unpopular throughout the financial services industry since it was introduced in 2010 as part of the Dodd-Frank Act. Experts have claimed that US banks will be at a disadvantage to foreign firms who will still have the ability to carry out proprietary trading.
However in a September interview with Risk magazine, JP Morgan’s chief executive for Europe, the Middle East and Africa, Daniel Pinto, was confident that the Volcker rule would have little impact on the bank’s activities.
“That piece of the rule is no concern at all – the prop part of it, discrete prop trading – that’s not an issue,” he said. “Last year, it was less than 1.5% of revenues for the investment bank. There were three small groups, and some of them will go to the asset management division, where they will build a client book. It’s not relevant for us. Our culture is not that kind of [hard gambling] culture.”
This article was first published on Risk