JPMorgan Chase & Co. picked Mike Stewart to head a proprietary trading unit the firm is moving from its investment bank ahead of U.S. restrictions on making bets for its own account, a person briefed on the decision said.
The bank may seed the group with as much as $2 billion, Financial News reported earlier, citing an unidentified person familiar with the situation. While plans aren’t final, the team may start a core fund that invests mainly in emerging markets, credit and equities, the newspaper reported.
Congress passed restrictions known as the Volcker rule last year, limiting risk-taking by lenders to prevent a recurrence of the credit crisis. Proprietary traders make trades on behalf of their firm, rather than clients. New York-based JPMorgan said in September it planned to shift proprietary traders in emerging markets, structured-credit and equity units to its asset management division, with Stewart overseeing the move.
Stewart, co-head of the bank’s global emerging markets business, will lead investments in that area, Financial News said. Fahad Roumani, a managing director in credit proprietary trading, will run credit, and Deepak Gulati, head of global equity proprietary trading, will oversee equities, the newspaper said.
Jennifer Zuccarelli, a JPMorgan spokeswoman, said she couldn’t comment.
JPMorgan plans to close its desk for proprietary trading of commodities, affecting fewer than 20 traders, to comply with the new rule, a person briefed on the matter said in August.
Two Years to Comply
The Volcker rule, a provision of the Dodd-Frank Act passed last July, was named after former Federal Reserve Chairman Paul Volcker, who campaigned for limits on risk-taking by lenders following the global financial crisis. The Federal Reserve said this month that banks would generally have two years to comply after the rule takes effect.
Goldman Sachs Group Inc. last year shut down an equity proprietary trading group, Goldman Sachs Principal Strategies, to comply with the rule. Morgan Stanley, the world’s top merger adviser, said last month that it plans to break off its largest proprietary-trading group, Process Driven Trading, as an independent advisory firm by the end of 2012.
JPMorgan will try to raise money from outside investors for the fund, according to the report by Financial News carried on the Wall Street Journal’s website.
The company’s shares climbed 34 cents, or 0.7 percent, to $47.02 as of 10 a.m. in New York Stock Exchange composite trading. The stock is up 11 percent this year.
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