BNP Mortgage-Bond Traders Said to Leave New York Division

Two BNP Paribas SA (BNP) mortgage-bond traders who invested money for France’s largest bank left the lender’s New York securities unit last month, according to four people with knowledge of the departures.

The traders, Michael Pyatski and Mattan Horowitz, focused on U.S. home-loan securities with government backing and related derivatives, said the people, who asked not to be named because the information isn’t public. Horowitz declined to comment when reached by telephone. A phone number listed for Pyatski was out of service, and he couldn’t immediately be reached for comment.

Cesaltine Gregorio, a spokeswoman for BNP Paribas in New York, declined to comment.

Banks are adapting trading businesses to an international accord calling for lenders to hold more capital and liquid assets and the Volcker Rule, the piece of the 2010 Dodd-Frank Act that limits the risks banks can take with their money. BNP Paribas is seeking to “manage our costs and resources efficiently,” fixed-income head Frederic Janbon said at meeting for investors in March.

“We’re adapting the business model and taking steps to remain lean,” Janbon said.

Pyatski worked at BNP since at least 2001, while Horowitz joined from Credit Suisse Group AG in 2010, according to Financial Industry Regulatory Authority records. On his profile on LinkedIn Corp.’s website, Pyatski said he was head of a “proprietary trading desk” focused on agency mortgage-backed securities. Horowitz described his role as trading “the entire agency MBS spectrum” as a prop trader for BNP, according to his LinkedIn page.

Volcker Exemption

Gregorio said she couldn’t comment on the traders’ descriptions of their roles.

While the Volcker Rule prohibits investments by banks meant to profit over the short term, known as prop trading, it includes exemptions for debt including Treasuries and government-backed, or agency, mortgage securities. Prop trading can also involve longer-term wagers by securities firms that aren’t tied to helping clients.

The Paris-based lender said in February it was replacing its co-heads of fixed income in the Americas with Bob Hawley, who had been leading the business in the Asia-Pacific region. That followed a restructuring of its corporate and investment banking unit announced last year. It also cut mortgage-bond and interest-rate traders and salesmen in New York this year, including head mortgage-bond trader Harpal Maini.

The $5.4 trillion agency mortgage-bond market last year suffered its first annual loss since 1994 even after the Federal Reserve in 2012 started open-ended purchases of the debt. As the Fed began reducing its buying, the securities soared 3.1 percent this year, Bank of America Merrill Lynch index data show.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net Caroline Salas Gage

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