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New York Times - Several leading hedge fund managers told Congress on Thursday they support some new regulation of hedge funds and the complex derivative securities that are partly blamed for the global financial crisis.
But they advocated only the lightest supervision of their industry, and said they would be willing to disclose their secretive trading activities to regulators only with a guarantee the information would not be released to the public. One executive claimed that requiring hedge funds to publicly disclose their proprietary trading strategies would be like requiring Coca-Cola Co. to reveal to competitors its proprietary recipe for Coke.
"Proper regulation is critical, but the best regulation is created with an eye toward unleashing opportunities, not limiting possibilities," said Citadel Investment Group Chief Executive Officer Kenneth C. Griffin. "We must solve the serious issues we face but in a way that does not stifle the best innovative qualities of our financial markets."
"Proper regulation is critical, but the best regulation is created with an eye toward unleashing opportunities, not limiting possibilities," said Citadel Investment Group Chief Executive Officer Kenneth C. Griffin. "We must solve the serious issues we face but in a way that does not stifle the best innovative qualities of our financial markets."
AllAboutAlpha.com - Several pundits have recently pronounced the so-called “hedge fund model” to be dead (or at least “upended“). But is the patient clinically dead, or is it just having an out-of-body experience? After the recent trauma experienced by the sector, hedge fund administrators will likely play a central role in bringing the industry back from the other side.
Hans Hufschmid, the CEO of GlobeOp, one of the world’s biggest hedge fund administrators, recently told the FT that:
“There will be tremendous trading opportunities. We are seeing opportunities that we haven’t seen in our lifetime, just in terms of relative trading let alone directional…
“Convertible bonds are extremely cheap, there are mortgages that are extremely cheap and distressed assets that are extremely cheap. There are lots of opportunities that are ideal for hedge funds to take advantage of.
“Further, hedge funds will face less competition with investment bank proprietary trading desks largely disappearing from the market.”
Bloomberg.com: UK & Ireland - Citadel Investment Group LLC, the $19 billion hedge-fund firm run by Kenneth Griffin, hired three senior executives from Lehman Brothers Holdings Inc. to boost its fixed-income team.
Timothy Bryan Wilkinson, former head of fixed income proprietary trading at Lehman Brothers, will work on the same business at Citadel’s proprietary trading group along with John Alexander Goodridge, the company said in an e-mailed statement today. Alex Maddox, 38, formerly head of European mortgage-bond trading, will become Citadel’s head of securitized products in Europe. The team will report to Patrik Edsparr, Citadel’s global head of fixed income and European chief executive officer.
Banks and hedge funds are hiring Lehman executives as the bankrupt U.S. securities firm cuts 750 jobs in its European fixed income division after talks to find a buyer failed.
Guardian Unlimited - Hedge funds are buying into power supplier Scottish & Southern Energy in hopes of a bid for the company, currently valued at over £12bn.
The latest fund to have bought shares is Centaurus, headed by Frenchman Bernard Oppetit, who is understood to have made millions via a recent investment in British Energy.
It caused a splash in the UK in 2006 when it blocked a bid for engineering company Amec from private equity group Texas Pacific on the grounds that it was too low.
Centaurus has been joined at SSE by other hedge funds such as Lansdowne, GLG and Odey Asset Management.
Oppetit is known in the City as a canny investor and has built up Centaurus into a £5bn fund after leaving BNP Paribas, where he was head of proprietary trading. On its website, Centaurus says: ‘We develop a close and constructive ongoing dialogue with the executives of the companies that we invest in, and focus on achieving an in-depth fundamental understanding of their businesses.’
West Palm Beach (HedgeCo.net)- A Swiss Bank has picked up on a hedge fund platform, Orc Trading, to replace key technology for its electronic trading operations. The order was booked in Q1 2008.
"We have thoroughly evaluated several trading systems providers and chose to go with Orc Trading for its combination of speed and stability," said Thomas Kurzen, Head Trading Technology at InCore Bank AG. "We also appreciate the high quality of Orc’s supporting organization and the great potential for growth offered by Orc’s open architecture.
While the new trading solution is initially intended for proprietary trading only, the Swiss bank plans to add new functionality, such as Orc Broker for its sales desk operations. Other future opportunities investigated by the bank include using extended connectivity for incoming and outgoing order flow with access to multiple international markets, as offered by the Orc Connect framework.
Orc Software is a provider of solutions for the financial industry in the areas of advanced derivatives trading and low latency connectivity. Orc’s customers include leading investment banks, trading and market-making firms, exchanges, brokerage houses, institutional investors and hedge funds. Orc Software is next exhibiting at Screen Events in Amsterdam, September 25.
InCore Bank AG is the first independent Swiss corporation with a banking and securities dealer license and is a wholly-owned subsidiary of the Maerki Baumann Holding AG.
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FINalternatives- Another pair of Citigroup fixed-income executives is to set up its own hedge fund shop.
Jeff Jacob and John Humphrey, who run the global special situations group they established at Citi four years ago, will leave the firm in about two months. Citi is splitting up their proprietary-trading desk, which focuses on distressed corporate bonds and loans, and restructuring the group to focus on customer trading. The move is just one of a variety of risk-cutting moves by Citi, which has taken some $43 billion in writedowns and losses resulting from the credit crisis.
Jacob and Humphrey, who came to Citi in 2004 from Merrill Lynch, will launch their distressed-debt hedge fund early next year. The fund will be seeded by Citi, although the terms of that investment are still being negotiated, though all of its current assets will remain with Citi.