- Market-making arm will begin trading off-the-run securities
- Customers are looking for sustainable liquidity, says Hamill
Citadel Securities hired Michael de Pass, a former trader at Bank of America Corp., to head Treasuries trading in a further expansion into the $13.5 trillion market for U.S. debt.
De Pass, who starts Monday, will oversee trading of the most liquid Treasuries, as well as engineer the company’s first foray into older issuance known as off-the-run securities, Paul Hamill, global head of fixed income, currencies and commodities, said in an interview. De Pass, who left Bank of America in June, will focus on trading 10-year securities. He will be based in New York and will report to Hamill. Bank of America did not immediately respond to telephone and e-mail requests for comment.
"A lot of customers are looking for liquidity in off-the-runs,” Hamill said. “Consistency of price quality and the ability to execute on demand seems to be challenging for some dealers. There’s a whole new demographic of clients we’ll be able to reach."
Citadel’s hire is part of a broader push to build out its presence in the world’s most important bond market. The market-making arm of Chicago-based Citadel LLC said it plans to add traders who specialize in trading short- and long-end Treasuries by the first quarter of 2017. The initiative comes as primary dealers have cut back on staff and trading amid stiffer regulations to limit risk-taking.
Hamill said the firm will offer its products to existing clients as well as target more institutional investors, including pension funds and insurance companies. In November, the firm was the first of its kind to start trading Treasuries with investors on a platform run by Bloomberg News parent Bloomberg LP.
Citadel is aiming to be among the top Treasuries trading firms, Hamill said. "We’re not looking to play around the edges."