BNP Paribas has a global proprietary trading business. Who knew? Certainly not us. We thought it was a nice French universal bank with a moderately-sized, risk-averse, market-making, corporate and investment bank attached.
Our suspicions were raised by the recent arrival of Sekhar Venkatraman in London. According to the ever-helpful FCA Register, Venkatraman was registered at BNP Paribas's Harewood Avenue office on January 2nd. Who is he? No less than the 'Global Head of Proprietary Convertible Trading' at the French bank.
Venkatraman has a good prop trading pedigree. Before joining BNP in Paris in his current role in 2007, he worked for Mulholland Capital Advisors and Helix Investment Partners, both US-based hedge funds.
So does BNP Paribas still operate a proprietary trading business? The bank declined to comment.
Assuming that BNP does still employ proprietary traders, it may not do so for long. The French government has introduced a bill that will compel BNP Paribas and SocGen to wall off any proprietary trading activities by 2015. If that doesn't do the trick, the European Union's iteration of the Volcker Rule (derived from the Liikanen Report) is due to take effect from 2018. The Financial Times reports today that this will ban prop trading, (defined as trading for, "the sole purpose of making a profit for own account without actual or anticipated client activity”) at Europe's 30 largest banks.
Venkatraman's days as a global head of proprietary trading at the French bank may therefore be limited. However, BNP may not miss the activities of he and any other prop traders too much anyway. Insiders say the bank is mostly engaged in client-focused market making business and in November 2012 Alain Papiasse, head of BNP's corporate and investment bank (CIB) suggested that less than 2% of the CIB's revenues were derived from prop trading - far less than US investment banks made from similar endeavours in their prop trading prime.