As firms begin to implement the reforms mandated in the Dodd Frank Financial Regulatory legislation, one of the first areas to be impacted is the so called ‘prop trading desks’. One of the largest firms in this market to date has been Goldman Sachs (NYSE: GS), and as firms begin to shut down these business units or transform them, many key traders have decided to take the reins and setup their own firms instead.
Daniele Benatoff and Ariel Roskis are about to setup their own fund in London. They have been part of the principal strategies desk at Goldman, and struck a deal with Brummer & Partners of Sweden for backing. Brummer is one of the largest hedge funds in Europe, with $10 billion in assets under management, and will take an ownership stake in the new fund in return for $300 million. Their departure was first reported in The Financial Times, and is part of a larger exodus of traders from Goldman and its rivals as the regulations in the Dodd-Frank financial overhaul put pressure on banks to take fewer risks with their own money. Previous to this, Goldman saw it’s nine-person team led by Bob Howard move to private equity firm Kohlberg Kravis Roberts to continue its operations. Another of the bank’s senior traders, Morgan Sze, the global head of the proprietary trading desk, is forming a fund called Azentus Capital, which will be based in Asia.
Brummer has been aggressive in the wake of the new regulations, capitalizing on this opportunity to embolden it’s knowledge base and stable of investments. Last month it announced the creation of Orvent, an event-driven fund based in Singapore that started operations at the beginning of the year, focusing on Asia-Pacific corporate shares that may be mispriced. A year ago this month, Brummer introduced the Observatory credit markets fund, which focuses on corporate loans.
