Investment bank and asset manager Guggenheim Partners plans to hire 150 prop traders who have been elbowed out of investment bank prop trading desks because of the Volcker rule, Bloomberg reports.
The money manager is launching a new unit called Guggenheim Global Trading, that will be headed up by managing partners Loren Katzovitz and Patrick Hughes, who worked together at Kidder Peabody back in the early 90s and joined Guggenheim in 2002.
The pair will recruit between 100 to 150 traders to manage up to $2 billion.
With an exodus of talented prop traders from top-tier banks like Goldman Sachs and Merrill Lynch, there is a glut of trader talent from which boutique money managers can now pick and choose, and Guggenheim wants to capitalise on that.
According to Bloomberg, Guggenheim CEO Alan Schwartz is launching the new multistrategy fund “because regulatory changes are making experienced traders easier to hire.”
“Historically the people leaving a prop desk would have gone out to a prime broker and launched a hedge fund. Now launching is just more difficult unless you have critical mass,” Katzovitz told Bloomberg. He added that in 2007 it was near impossible to attract “the right talent to build something like this,” but now the pool of talent available is amazing — the “quality of people you can get is just remarkable.”
The firm is already talking with trading teams; the firm reportedly plans to hire 20 to 25 trading teams for the new fund.
Both Katzovitz and Hughes worked together at Royal Bank of Canada after they left Kidder Peabody. At RBC, Katzovitz was co-head of equity derivative and prop trading and Hughes helped run the alternative assets business.