Thomas Paul, chairman of the global markets interest rate risk committee at Deutsche Bank in London, has moved to New York to kickstart a fixed-income-focused trading arm, which will reportedly employ capital from both Deutsche Bank and third parties. The unit will invest in bonds and use over-the-counter derivatives, according to an official familiar with the project. Paul, who declined comment, is in talks with senior staffers at competing firms to join the project, with hires expected to be made over the coming weeks, the official added.
One official familiar with the project said the trading arm will work with capital from third-party investors, making the structure function more like a hedge fund than a proprietary desk. An official at a rival firm noted that it is increasingly common for banks to establish hedge funds in favor of proprietary operations because it enables them to participate in its gains, for example by providing seed money, while at the same time removing a lot of the volatility associated with prop desks from its balance sheet. It could not be determined how much the investment arm will manage in assets.
Paul has a great reputation for relative-value trading and as a U.S. specialist, noted one rival in New York. Before moving to London in the newly created seat of chairman last September (DW, 9/15), Paul worked as head of interest rate trading for the Americas in New York. Wolfgang Matis, global head of fixed income in London, to whom Paul reports, did not return calls.
