JPMorgan Chase has set up a new alternative investments unit within its asset management division and has begun transferring its proprietary traders to the new business.
Investments banks are rushing to do away with their prop. trading desks, which are set to be barred under newly-enacted bank regulations in the U.S. While Goldman Sachs has chosen to simply shutter its prop. desks, JPMorgan will move its equity, emerging markets and structured credit traders to the new alternatives unit, where they will manage money for clients rather than the bank itself.
“Colleagues who will transition have delivered strong risk-adjusted returns for the firm, and we are confident that clients will benefit from their investment experience and insight,” Mary Erdoes, CEO of JPMorgan Asset Management, said in an internal memo. The memo was first reported by Dealbreaker.com.
The prop. traders moving to the new unit will report to Erdoes. The transition, headed by co-head of global emerging markets Mike Stewart, will take a number of years, Erdoes and Jes Staley, CEO of JPMorgan’s investment banking unit, said.
Stewart, who will lead the new unit, is also working with Larry Unrein, who heads JPMorgan Asset Management’s hedge fund and private equity operations, to establish it. Stewart will remain in his current post through the end of the year.