JPMorgan Prop Trading Head Departs To Launch Hedge Fund

Mar 5 2012 | 4:47am ET

JPMorgan’s top prop trader is leaving the investment bank to launch his own hedge fund, which is likely be to one of the largest launches this year.

Mike Stewart, global head of proprietary trading and former head of emerging markets, is gearing up to launch his fund--Whard Stewart--in the second quarter, reports the Financial Times. The emerging markets trading team at the bank is expected to join him, though according to the FT, JPMorgan is not investing any money in the new venture. The fund will be based in London.

The move to break away from the investment bank means that Stewart and his group will have more leeway in trading, as the “Volker rule,” which is soon to come into effect in the U.S., bans banks from proprietary trading. Market watchers have warned that the rule will spur top traders to leave large banks and set up their own funds.

Steward had been tapped by JPMorgan to lead a new 50-strong alternative investments unit within the bank’s asset management business. By forming the new group, JP Morgan could effectively keep the traders in-house, but would be in compliance with the Volker Rule as the bank itself would not invest any of its own money with the new unit.

JPMorgan had been planning to seed a hedge fund in the new unit with $2 billion. Under the new U.S. rules 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 need to raise nearly $65 billion from outside investors. It is not known if this capital requirement or inability to raise that capital led Stewart to leave the bank and start his own fund.

The bank has not yet named Stewart’s replacement. 


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR