The National Bank of Canada has set up a New York-based equity derivatives trading desk. It has hired three equity derivatives traders at Commerzbank Securities, including head of the U.S. desk Yury Shmuylovich, to start the operation. The hires represent the firm's first dedicated commitment to U.S. and European equity derivatives, said Ricardo Pascoe, senior v.p. in capital markets in Montreal. Pascoe joined NBC late last year from Commerz, where he had headed global foreign exchange, alternative investment strategies and proprietary trading (DW, 8/31).
The traders, who are based in New York, will primarily trade proprietary capital, but will also be responsible for some client business, including structuring products with underlying U.S. and European equities for Canadian clients. The hires are designed to extend the NBC's trading book geographically, said Pascoe, adding that the team also brings to the firm a new expertise in structured products. Shmuylovich added that the opportunity to start a new business encouraged the move, with the position further being attractive because of its enhanced focus on prop trading.
For its client business NBC will offer some more sophisticated structures for Canadian retail investors than are already commonly available in the country, said Shmuylovich. For example, volatility certificates, which offer buyers exposure to volatility shifts on the underlying equities, but not to their directional moves, are attractive in the low volatility environment. Traditionally, structures offered to retail investors in the U.S. and Canada are more vanilla than those distributed in Europe. Niche products for high-net-worth and hedge fund clients will also be offered.
The departures, which also include Sean Healey and Arie Aboulafia, is expected to hurt Commerzbank's U.S. derivatives operation, which has already been hit by large-scale defections in credit derivatives. The firm's equity derivatives desk has been one of the firm's better performing operations, noted one official.
