While investment banks start shedding proprietary trading operations to comply with the Dodd-Frank financial reform bill, the hedge fund industry is continuing to hire and many proprietary traders are crossing over, Illana Weinstein, CEO of IDW Group, an executive search firm, told CNBC Friday.
“The amount of incoming flow to us from folks that were very sticky in the past and very talented is very unbelievable in terms of wanting to leave the prop desk to go to the hedge funds to not have to deal with all of this stuff,” Weinstein said in regards to financial regulation.
“I think it’s turned hiring from the prop desks into a buyer’s market for hedge funds,” she added.
The reason, she explains, is proprietary traders used to have access to capital, access to risks and compensation expectations were higher prior to the passage of the financial reform bill.
According to Weinstein, hedge fundsare gaining a competitive advantage in terms of hiring.
“Hedge funds have their pick of whoever the remaining talented prop traders are,” Weinstein said.
She also said investment banks have tapered of hiring citing “anemic” trading levels and lower expectations for revenue as key reasons.
Weinstein went on to say hedge funds are driven by their ability to raise and deploy capital and hedge funds are looking to hire in order to do so.