Chris Rokos's Hedge Fund Startup Approved to Trade by Regulator

  • Rokos Capital Management authorized by U.K.'s FCA on Monday
  • Brevan Howard Asset Management co-founder backed by old firm

Chris Rokos, a co-founder of Brevan Howard Asset Management, gained approval from the U.K.’s financial regulator to start his own hedge fund in London.

Rokos Capital Management, which will trade on macroeconomic themes, was authorized Monday by the Financial Conduct Authority, according to the register of individuals and companies approved to work in finance. That clears the way to start trading in the fourth quarter as planned. A spokesman for Rokos declined to comment.

The firm is likely to be the largest hedge-fund startup in London this year, with bankers expecting Rokos to raise billions of pounds. Its assets will be divided between Rokos, Borislav Vladimirov, a former colleague at Brevan Howard, and Stuart Riley, formerly of Goldman Sachs Group Inc., according to a person with knowledge of the matter.

The fund will have an initial capacity to manage $3 billion, a person with knowledge of situation said in August. Rokos will offer clients a range of fees -- a management levy of 1 percent or 2 percent of assets and a 20 percent or 30 percent cut of profits, according the person.

Rokos, 45, left Brevan Howard in 2012 after generating a total of $4 billion for the firm he co-founded in 2003. Brevan Howard will have a "financial interest" in Rokos’s new firm, according to a joint statement in January. The two parties earlier settled a lawsuit brought by Rokos over an employment agreement which would have prevented him from managing clients’ money until 2018.

Other managers starting hedge funds in London this year include David Fear, an ex-Ziff Brothers Investments money manager whose Thunderbird Partners raised $1.5 billion, and ex-Citadel trader Bruce Emery, who aims to raise $500 million with Greenvale Capital, which starts trading on Thursday.

Hedge funds with a global macro strategy like Rokos Capital Management have under-performed the wider industry this year, averaging a 0.7 percent loss in the first eight months compared with a 0.2 percent gain across all strategies, according to Hedge Fund Research, a Chicago-based data provider.

Well-known global macro funds in Europe include Brevan Howard’s Master Fund, which gained 1 percent for the year through Aug. 28, and BlueCrest Capital International, which lost 1 percent in the first eight months, according to people familiar with the situation.

Reuters reported the regulator’s approval earlier on Tuesday.

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