At last, an investment bank that looks like a haven for the displaced proprietary traders: In 2012, the Brazilian bank BTG Pactual increased its proprietary trading revenues by a jaw dropping 3,771%.
BTG said the 'outstanding performance' reflected, "good performance from most of our strategies, including certain strategic equity investments as well as emerging markets and global credit, which benefited from continued improvement in market conditions in Europe after a successful Greek bailout program." In other words, it appears BTG's proprietary traders successfully bet on the non-disintegration of eurozone. BTG didn't respond to a request to comment on its results.
Proprietary traders are no longer on investment banks' most wanted lists. Morgan Stanley closed its proprietary trading business in 2012, J.P. Morgan wound down its commodities proprietary trading business in 2010, Nomura cut its prop traders at the end of last year.
Some ex-proprietary traders from investment banks have reappeared in hedge funds. Morgan Stanley's former prop traders have regrouped in a hedge fund, PDT Partners. The former head of equity prop trading at J.P. Morgan, for example, is launching a Switzerland-based fund soon. Others have been shunted into banks' asset management divisions - Goldman Sachs, for example, has ditched proprietary trading in favour of longer term 'multi-strategy investing.'
Not all ex-prop traders' hedge fund ventures have been successful. It was reported yesterday that Benros Capital, an event-driven hedge fund founded by two ex-Goldman prop traders, was closing. This followed last year's closure of Edoma Partners, the hedge fund set up by Pierre-Henri Flamand, another ex-Goldman prop trader.
BTG Pactual has also been hiring and increasing pay. In 2012, the bonus pool rose 124% and headcount rose 67% to 2,195 people. The average person employed by BTG Pactual earned $374k last year. Most of BTG's recent hires have been 'employees' as opposed to partners - employee headcount rose 86% last year.
Last time we looked (April 2012), BTG had been hiring ex-UBS and JPMorgan bankers in London. In December 2012, it hired Adam Brown, a former JPMorgan, Bank of America and Goldman Sachs trader who most recently worked at hedge fund Horizon Asset Management.