Update: not so fast: Bloomberg reports that the whale is still beached: JPMorgan Chase Still Employs Trader Bruno Iksil, Spokesman Says. So... pile into the IG9 trade still?
Yesterday we speculated that the final confirmation that JPM has unwound its disastrous skew trade will only came once Bruno Iksil joins all the other members of the CIO team in being involuntarily retired: "As for the question of how much additional P&L loss JPM has sustained from Friday through today is a different matter entirely, and we are confident the next announcement from JPM will come momentarily, coupled with the announcement that Bruno Iksil, the last remnant of the CIO desk, and now having completed his duty of unwinding the trade that brought so much pain for Jamie Dimon, has been retired." Sure enough, the NYT reports that Iksil is now history.
The $2 billion trading loss at JPMorgan Chase has claimed another victim.
Bruno Iksil, the so-called London whale, is leaving the bank, according to current and former traders who worked with him.
Mr. Iksil gained notoriety last month after reports that he built up outsizes positions that distorted prices in an obscure corner of the credit markets.
His departure follows the resignation Monday of Ina Drew, the 55-year-old banker who oversaw the disastrous trade as head of the chief investment office. Achilles Macris, a top JPMorgan official in London and a senior London trader, Javier Martin-Artajo, are also expected to leave.
This effectively concludes the JPM prop trade debacle. The only loose end is another report from JPM on the final loss tally: our estimate $4-5 billion.
A 38-year-old hotshot trader and chess master named Boaz Weinstein was the driving force behind the harpooning of the “London Whale,” hedge-fund industry sources told The Post.
Weinstein, who runs Saba Capital Management, helped shine light on the credit default swap index trade that blew a $2.3 billion hole in JPMorgan Chase’s balance sheet.
The JPMorgan position was amassed by a trader in the bank’s London office named Bruno Iksil — called the “London Whale” for the large positions he was accumulating in the Investment Grade Series 9 10-Year Index CDS.
Weinstein, a renowned CDS index arbitrageur who launched Saba in 2009, in early February recommended the index, which tracks a basket of US corporate bonds.
“They are very attractive” and can be bought at a “very good discount,” said Weinstein, a former Deutsche Bank proprietary trader, speaking at the Harbor Investment Conference on Feb. 2.
It appears the index was so cheap because Iksil was buying it to make a big short bet. Weinstein, whose Saba overseas $5.5 billion in assets, decided to go long and said he bought the index a few days before the conference at around 120 basis points.
For a while, Weinstein’s genius trade wasn’t working out. The IG9 Index continued to sink under the weight of the Whale’s buys — hitting a low of 105 on March 21.
But two weeks later, on April 3, reports surfaced about the Whale’s outsize positions and the tide started to turn.
Take home message: hedge funds will no longer stand idly by as Fed-backed prop desks trade against them: they will complain to the press.
As for verions of the basis trade: it is nothing new - just ask Boaz... He has lots of experience with it.