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Are Brevan Howard's risk managers putting people off?
26 June 2009By Sarah Butcher
COMMENTS
poorly performing traders can't expect the p'ss clients money up the wall, and have no ramification for that, applaud Brevan for their perform or else approach. Read all comments »Yesterday we ran an article lauding Brevan Howard’s comparatively large number of risk managers.
However, it has been brought to our attention that having that many risk managers may have a negative externality: traders allegedly don’t like working there for long.
“The turnover of traders at Brevan Howard is high,” claims a senior prop trader at one bank in London. “Their risk managers are very strict with you the moment you start making losses and not everyone likes that.”
We were unable to establish whether this is indeed the case as Brevan Howard declined to comment.
An article published on Bloomberg several months ago, reinforces the impression of high trader turnover. However, this appears to be Brevan Howard's intention.
It says an 8% loss triggers a change in the trader’s mandate and a further cut in capital and that a 12% loss leads to a shutdown in trading that may result in a resignation or dismissal.
Bloomberg also quotes an anonymous Brevan Howard employee, who says you’ve done well if you last two years at the firm.
COMMENTS
Tinny, Trading, Fri 26 Jun 09
speaking as a successful trader myself, this is absolutely brilliant risk mgmt from Brevan, and separates the wheat from the chaff - poorly performing traders can't expect the p'ss clients money up the wall, and have no ramification for that, applaud Brevan for their perform or else approach.
Add your comment »Douche, Investment Banking / M & A, Fri 26 Jun 09
Is Brevan the new Goldman Sachs? I think so!
Add your comment »Macro, Debt / Fixed Income, Fri 26 Jun 09
The purpose of hedge funds is to make absolute returns. Brevan do that brilliantly. It therefore doesn't matter if Brevan has a high trader turnover and/or traders who are unhappy with seemingly over zealous risk managers - as long as the fund as a whole delivers market leading returns (which it is) then it is the optimal strategy.
Add your comment »HH, HR & Recruitment, Fri 26 Jun 09
If you last 1 yr at Brevan you're pretty good! The risk management and capital cutting procedures are along the lines described in the article. There is no need to koto to external criticism, everybody in the market would love to have a shot at working there. I agree with "Douche", perhaps Brevan is the new GS
Add your comment »Zaa, Information Services, Fri 26 Jun 09
@ poorly performing traders can't expect the p'ss clients money up the wall....
Were you asleep during 2008?
Donald Duck, Hedge Funds, Mon 29 Jun 09
Pointelss to trade if you can't manage your risks...as extremes as those could be ! It's the basic of trading !! 12% loss: I bloody hope their guys get fired for that level (assuming it's on capital and not a TE ). Very unlikely BH algorythms would let a 12% loss occur anyway !! Even 8% sounds a lot. Any properly managed dynamic CS portfolio with strategic AA even in a macro universe could allow for a 8%TE but would never let it happen (since it's dynamic). C'mon...They have been delivering alpha & absolute returns for years hence these limits sounds very unlikely.
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