JPM sets up alternatives unit in the US

City A.M. Reporter
JPMORGAN Chase is starting a new alternatives unit in its asset management business, formed from traders who are no longer allowed to trade for the bank’s own account under new US rules, according to a company memo.

The fate of the JPMorgan traders has been up in the air as banks scramble to come to terms with the so-called Volcker rule restricting banks from betting with their own money, among other regulatory changes.

A person familiar with JPMorgan’s changes said about 45 traders will move from its investment bank to a new unit within its asset management business.

“We are confident that clients will benefit from their investment experience and insight,” wrote investment bank and asset management heads Jes Staley and Mary Erdoes in the memo to employees.

Mike Stewart, co-head of the investment bank’s global emerging markets business, will run the new business, according to the memo.

Stewart will work with Larry Unrein, head of private equity and hedge funds within asset management, in establishing the business.

JPMorgan expects to complete the transition over several years, according to the memo.

Chief Executive Jamie Dimon had said earlier this month the bank would remove some traders from its investment bank unit because of regulatory changes.

Dimon has complained about the scattershot nature of US financial reform, which he says is making banking businesses more complicated rather than improving the financial system.

JPMorgan, the second-largest US bank by assets, also expects revenues to be hurt by new rules that limit the charges it can apply to credit card and current account customers.