Citadel Investment Group is looking to add 50-100 equity specialists in Hong Kong, a move that will likely shake up compensation levels across the asset class and the market share of current players. The ramp-up is spearheaded by Tim Throsby, who recently joined the Chicago-headquartered hedge fund giant from Lehman Brothers, where he was the global head of equity derivatives (DW, 7/29). Throsby did not return repeated messages.
The hires will cover a variety of investment strategies and market making in equity derivatives, as well as for operations, say officials.
Equity players said Citadel will likely target flow-driven markets especially Hong Kong and Korea for market making activities, which could cut into the market share of investment houses. "I see them taking a bite out of the pie rather than expanding the market's size," said a trader. Officials speculated the firm could be big enough to gain exchange seats for listed derivative markets, which would complement trading OTC products. Although details of Citadel's plans could not be determined, most equity derivative officials noted it could take time before it starts to take away business and profits from established dealers, as Asian markets remain buoyant.
One equity head at a top-tier house in Hong Kong said the buildup could push up compensation for equity derivative staff, given the limited supply of experienced traders. "I don't think there are 60 quality traders in the region--it's already a tight market," he added. A headhunter in Hong Kong concurred, "This will definitely put pressure on resources. Not only are new funds like Citadel and asset managers looking for sell-side staff, but equity derivative houses are also still expanding aggressively in Asia." But while increasing competition, Citadel could also prove a big client for dealers in Asia: the firm is also understood to be shopping for a prime brokerage in the region.
As for Citadel's expansion into the region, another equity head added, "If you look at their track record, they obviously know what they're doing and see potential out here."
