HONG KONG – Five former proprietary trading desk bankers at J.P. Morgan in Singapore have started a new firm, linking up with one of Canada’s largest mutual funds to launch the business.
Dhimant Shah, 41, the former head of proprietary trading at J.P. Morgan Chase & Co in Singapore, told Reuters that the plan is to launch two funds investing in credit markets. The funds will also bet on foreign exchange, equity indices and interest rates.
US regulators have effectively ended the traditional practice of banks trading their own money through prop desks, prompting hordes of traders to strike out on their own.
What makes the J.P. Morgan Singapore spin-out unique is the support it is getting from Canada’s Mackenzie Investments, the $64 billion money manager.
Traditional Western asset managers such as Aberdeen Asset Management plc and BlackRock Inc, in their efforts to expand in Asia, have followed the standard path of launching mutual funds and other products familiar to them.
Mackenzie, by contrast, is hooking up with the prop team to plant the Canadian group’s flag in Asia, a strategy that comes with heftier risks and rewards.
”We were looking for a strong and stable institutional backing,” said Shah, who is leading the spin-out, which will remain based in Singapore and be named Mackenzie Investments Pte. Ltd. ”And Mackenzie was looking to foray into the Asia credit space along with its strong macro capabilities so as to potentially build an absolute returns platform.”
Mackenzie’s funds will not be available to retail investors.
Shah did not disclose the initial investments in the funds but people with direct knowledge of the plan said Mackenzie’s backing includes a $100 million start-up capital for a long only fixed income fund, and $20 million for a long/short hedge fund that will combine credit and macro strategies. (Reuters)