JPMorgan Chase’s Jamie Dimon is adding new muscle in an effort to boost its hedge fund business. (Reuters)
Jamie Dimon is betting his bank can profit from catering to hedge funds and asset management firms bracing for a wave of new financial regulations.
The JPMorgan boss placed 26-year veteran Carlos Hernandez in charge of a new investor-services group, part of so-called prime brokerage services, which focuses on hedge funds, pensions, endowments and other financial firms that are facing a number of new rules.
Some of the provisions are set to go into effect as soon as Dec. 31. With deadlines looming, money managers are scrambling to be in compliance.
Under the new rules, for instance, asset managers will be forced to post cash or cash equivalents as collateral on so-called over-the-counter derivatives trades.
Demanding that collateral be posted on every trade for hedge funds, insurance companies and other asset managers such as pensions and endowments is a new requirement under the Dodd-Frank financial overhaul law.
The sweeping legislation passed in the wake of the financial meltdown has some money managers griping about rules that they say are much more complicated than they were in the past.
The new edicts are expected to place heavier administrative and financial burdens on these firms, challenging their ability to operate and turn a profit in the new regulatory environment.
That’s where JPMorgan and other custodial banks, including Bank of New York Mellon, have been hoping to step in and forge new client relationships.
“The goal is to help our clients optimize their businesses,” Hernandez told The Post during a telephone interview.
Hernandez, 52, who formerly ran JPMorgan’s equity division, was named in September to run the investor-services unit, which the bank has been attempting to build up.
Such investor-services units may be one of the few growing areas for big banks, which are facing head-count reductions by the thousands in the rapidly changing Wall Street landscape.