Citigroup has staked out its ambitions to capture business flowing from sweeping reform of the over-the-counter markets by poaching 14 bankers – mostly from JPMorgan – as the bank relaunches its exchange-traded derivatives business.
The move is a sign that even as some banks have shed thousands of jobs amid anaemic trading conditions, some are hiring in anticipation of the growth of services, such as clearing of OTC derivatives, propelled by the Dodd-Frank Act in the US and similar reforms in Europe.
Citi has created a new team of 26 bankers in its “exchange-traded and OTC clearing” business by this week hiring seven bankers from rivals, including four from JPMorgan. That comes on top of six hired earlier from JPMorgan.
The moves were announced in a memorandum to staff by Jerome Kemp, global head of listed derivatives sales and clearing. He was poached by Citi in October last year from JPMorgan, where he had spent 17 years.
Banks are racing to build up such businesses because Dodd-Frank stipulates that futures brokers must act as intermediaries between users of OTC derivatives and clearing houses. The act mandates that OTC derivatives suitable for clearing be processed at clearing houses to help reduce risks in the financial system.
Banks have been expanding their traditional exchange-traded derivatives broking units to include OTC derivatives broking, resulting in fierce competition for talent with experience in issues such as collateral management and clearing.
Mr Kemp has spent the past eight months restructuring Citi’s ETD business, integrating it with a new OTC clearing business in a move that is also happening at other investment banks.
Mr Kemp said: “The key is a global offering covering the full range of products – futures and OTC execution, clearing, cross-product margining, collateral management and custody. We’ve strategically invested in people and infrastructure to ensure we can meet all of the needs of our clients as regulatory reform is implemented globally.”
The relaunch at Citi comes the same week as Mr Kemp’s former colleague and co-head of futures and options at JPMorgan, Peter Johnson, was hired by Bank of America Merrill Lynch as head of global futures and OTC clearing – a similar job to Mr Kemp’s.
Of the four JPMorgan bankers hired in the latest round at Citi, Conor Cunningham joins the bank to run its ETD business in Asia from Singapore; Chris Day heads up origination Asia, based in Hong Kong; while Ian Nissen becomes head of futures and prime finance sales in Australia.
However, Citi’s long-standing head of futures, Najib Lamhaouar, is leaving the bank along with Mike Zimits, global head of derivatives clearing, and Khozu Arsiwalla, who was co-head of futures in Asia.
Chris Perkins, already at Citi, has been promoted to head global derivatives clearing, replacing Mr Zimits, while Mariam Rafi joins from Deutsche Bank to run derivatives clearing in North America.
Demetria O’Sullivan, who was hired from JPMorgan in June and chairs the risk committee at Eurex Clearing, the clearing house operated by Deutsche Börse, becomes head of global risk management.
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