One of the big stories of 2011 was surely the exodus of traders from the proprietary trading desks of the big banks. Financial firms are bleeding traders as U.S. and European regulators clamp down on the banks’ ability to trade aggressively using shareholder cash.
“Banks are particularly vulnerable at the moment to losing people,” according to Peter Henry, New York-based head of front-office search at Commodity Search Partners, in an article from Bloomberg. “Increasing regulations are forcing banks to defer more pay in stock as opposed to cash as well as constraining the traders’ ability to trade.”
Traders in energy, metals and agriculture are taking hedge fund jobs or launching their own funds after leaving financial firms that have cut jobs this past year. Departures of commodity traders from banks rose 10 percent this year, according to Commodity Search Partners Ltd., a Brighton, England-based recruiter.
“The top proprietary traders at the best bank desks have many competing opportunities, perhaps the strongest of which are the physical trading houses that are building derivatives businesses,” said John Thompson, a partner at Energy Alpha Strategies Ltd., an investment firm that helps set up and finance commodity hedge funds. “The amount of traders hoping to launch is increasing, and will accelerate in 2012.”
Though it’s a dicey time to raise capital, some of the more high-profile traders to leave big banks have succeeded handsomely.
George “Beau” Taylor, the 41-year-old former head of global commodity proprietary trading at Credit Suisse Group AG, started a hedge fund in February that has now attracted more than $1 billion in assets.
Gil Saiz, a 36-year-old who spent a decade at Goldman Sachs in New York, has recently closed his Vector Commodity Fund to new money after raising $600 million.
Kieran McKenna resigned from Zurich-based Credit Suisse as global head of oil and refined products at the end of July and started the Mastic Commodity Fund.
“It’s very clear that it’s possible to operate in a much more efficient manner to take advantage of significant opportunities that are becoming increasingly difficult to exploit in more complex corporate structures,” said McKenna.
What about you? Have you worked at or are you working on a bank’s trading desk now and contemplating a hedge fund job? Add your comments below.