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BAML’s central risk book gets a facelift

Changes are underway within Bank of America Merrill Lynch’s central risk book (CRB). The group recently hired away a veteran trader from J.P. Morgan’s CRB, and rumors are swirling that’s not the only move.

Former J.P. Morgan executive director Nuri Sercan Ozbay joined BAML earlier this summer, according to a source. Finra’s records show that Ozbay is now registered with Merrill Lynch and he is no longer in J.P. Morgan's directory. Ozbay spent the last five years working within J.P. Morgan’s CRB in New York, according to LinkedIn. He was formerly a VP at Citi where he also traded within its central risk book. Ozbay has a master’s degree and PhD in operations research from Columbia University.

Central risk books, which use highly complex quant models to identify a bank’s net exposure and make systematic trades to hedge against risk, are known to employ some of the sharper minds in banking. CRBs are also a bit of a hot-button topic as some have argued that they are distant cousins of prop trading and dark pools, which have been outlawed. However, the idea behind CRBs is to trade to mitigate risk, not necessarily make money. Banks and hedge funds have relied more on their CRBs in recent years, making traders with the experience highly-valued.

We’ve also heard rumors that there may have been a change in management at BAML’s central risk book but have so far been unable to confirm the moves. Bank of America didn’t respond to requests for comment on the hiring of Ozbay or rumors of a possible management shakeup. Ozbay didn’t respond to a request for comment.

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AUTHORBeecher Tuttle US Editor
  • Ia
    9 October 2018

    BAML’s Central Risk Book is really different. Size of this team is larger than any other central risk book on street. There are multiple MDs manage this team. Its team frequently regroup. It doesn’t deliver much but hired a lot. It’s more dramatic than White House.

  • ju
    31 August 2018

    big banks know how to get away from regulation. central risk book is their latest attempt. central risk book team in some banks are really different. these teams use client data for trading signal alpha research. the head of desk always try to request more client transaction data for his backtest. these teams are huge and head of desk try to hire even more. central risk book desks in these banks have more traders or trading strategists than any other banks.these banks send client order to central risk book without client awareness. all eligible flow will be absorbed by this desk and this desk can hold position for several days. regulators need to investigate big bank’s central risk book to make sure they are not prop trading and misusing client data. head of this desk must go to jail if his team is prop trading or misusing client flow data.

  • Ja
    14 August 2018

    It is okay bank doing prop trading as long as they don’t client data for trading purpose.

  • Fo
    14 August 2018

    One head of trading strategy leading many trading strategists, sounds like mini prop trading desk within bank.

  • Ui
    14 August 2018

    You can’t have people conduct client order analytics and people doing trading share same reporting line. Only middle and back office should be allowed to access client flow data.

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