RBC Dain Rauscher is planning to decentralize its trading of agency, mortgage-backed securities and corporate bonds as part of a plan to bring its trading functions in line with an enhanced sales force, according to Jerry Phillips, senior v.p. and director of taxable fixed-income trading in San Francisco. The move coincides with the hires of Greg O'Connor and John Hanlon from FTN Financial Markets, who are set to head up agency and MBS trading, respectively. O'Connor is based in Memphis, Tenn., while Hanlon will work out of West Patterson, N.J. In addition, the firm has promoted Steve Cutri to the role of head of corporate bond trading in New York. All three report to Phillips.
RBC Dain has acquired several smaller brokerages in recent years and, to bring its trading in line with its expanded sales force, is decentralizing the function process now and will have ultimate responsibility rest with the heads of the desk. Previously, all of trading had reported directly to Phillips. And, the fragmented nature was something that he says made it difficult to be nimble, particularly given that the firm trades bonds from 10 locations across the country. Now, individual traders will report to the desk heads, who will in turn report to Phillips. "We're trying to get stronger leadership in the trenches so we can make quicker decisions about prioritizing our capital," he explains, adding, "it makes a lot of sense."
Phillips says the firm has not decided yet whether the change will result in devoting increased capital to these sectors, but says that could be a possible outcome. "We've asked them to come in an embrace the present trading staff and team with sales and management to set goals and to grow these businesses," he says, noting this may require additional sponsorship of the markets.
He adds the firm is not a primary dealer of U.S. government bonds and that its activity in Treasuries is only of an accommodating nature for its clients. The trading of asset-backed securities is lumped into the MBS function under Hanlon