Boutique investment bank Imperial Capital has expanded its sales and trading platform for high-yield and distressed securities after seeing less competition in the market because of the effects of TRACE, NASD's Trade Reporting and Compliance Engine.
Randy Wooster, co-president of Imperial Capital, said TRACE is a big reason that there was a drop off in distressed trading volumes last year. TRACE provides immediate pricing information on corporate securities and some market participants, including the trade group, the Bond Market Association, have argued against the availability of immediate pricing information for high-yield securities because they allege it harms liquidity in this market. Wooster also cited the lower default rate for the decline. "TRACE has been a factor in reduced trading volumes and margins. Distressed trading volumes decreased 20% due to TRACE and a lower default rate," said Wooster.
He added that he has seen many people migrating from the sellside to the buyside because of the fall in profits in high yield. This has created opportunities for the firm to expand in high yield because bigger firms have less experienced personnel. "We see opportunities in the market as firms lose personnel due to the growth of hedge funds. We are seeing a lot of people leaving the sellside to go to the buyside. There is less experienced competition."
Imperial has expanded its sales and trading in high-yield and distressed bonds, bank debt and equities. It has also expanded its investment banking division to include restructuring services and has hired five people to help grow its sales and trading platform. Andrew Meany will be a v.p. of high-yield sales and trading in Imperial's New York office. Before joining Imperial, he worked at Morgan Joseph in the distressed debt and structured finance group. Harry Freidberg will also join as a v.p. in institutional sales and trading in Imperial's New York office. He worked as a derivatives trader in foreign exchange and equities, also at Morgan Joseph.
Also joining the firm is Courtney Rudnick, who will be v.p. of institutional sales in Imperial's New York office. She worked at Guggenheim Capital Markets, where she was managing director of high-yield and distressed sales. Anshuman Ghose will be a senior OTC trader in the firm's Beverly Hills office. He joins from Goldman Sachs, where he traded distressed securities. Finally, Tom Levine will be a v.p. of institutional sales, also in the Beverly Hills office. He joins from Banc of America Securities, where he worked in institutional equity sales.