JPMorgan Prop. Desk To Get $2B In Hedge Fund Transition

Feb 28 2011 | 1:36pm ET

JPMorgan Chase will seed its proprietary-trading-desk-cum-internal-hedge-fund with $2 billion.

The figure may be an indication of the big plans the bank has for its transformed prop. desk: Under the same Dodd-Frank law forcing JPMorgan to move the desk to its asset management unit, a bank's capital cannot make up any more than 3% of the assets of a hedge fund. In order for JPMorgan to keep its investment in the new unit at $2 billion, then, the firm would have to raise nearly $65 billion from outside investors.

JPMorgan is moving forward with plans to move the prop. trading team into the asset management unit, Financial News reports. The transition, announced last year, is being led by Mike Stewart, co-head of global emerging markets. Stewart is expected to lead the new unit's emerging markets portfolio, with proprietary credit trader Fahad Roumani handling fixed-income and Deepak Gulati, head of global equity proprietary trading, dealing with stocks.

Those are likely to be the three main areas of focus for the new hedge fund when it gets off the ground, although no formal decisions have yet been made. In announcing the move last year, JPMorgan Asset Management CEO Mary Erdoes warned that the transition could take a number of years.

The JPMorgan hedge fund will be based in London, with offices in New York and Singapore.


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