Thanks to the Dodd-Frank bill, there are hundreds, if not thousands of experienced prop traders looking for a new home. Which is where investment bank and asset manager Guggenheim Partners comes in.
Guggenheim (whose executive chairman is ex-Bear Stearns CEO Alan Schwartz) said it plans to hire 20 to 25 trading teams in the coming months, taking advantage of investment banks such as Goldman Sachs, Morgan Stanley and J.P. Morgan having to ditch their prop trading operations, as well as the difficulty of traders starting their own hedge funds, due to new financial regulations.
The Guggenheim venture is being led by "Loren M. Katzovitz and Patrick Hughes, 49-year-old managing partners who have worked together since 1993." They're "launching Guggenheim Global Trading LLC in Purchase, New York, with an initial investment of $500 million as soon as June 1. [The] firm plans to hire 100 to 150 traders and manage as much as $2 billion."
Guggenheim Partners (Guggenheim Global Trading's parent) currently has 1,500 employees and more than $100 billion in assets.
According to Katzovitz, "In 2007 it was difficult to attract the right talent to build something like this, [but] the environment is just different right now and the quality of people you can get is just remarkable."
Preparations for the firm's future new hires are already under way. Hughes said "the company is building out 30,000 square feet of floor space with more than 140 trading desks as well as offices and conference rooms to accommodate the new business."
(Related: Volcker Rule Smokes Out More Morgan Stanley Prop Traders)