UPDATE 1-Guggenheim fund to hire up to 150 prop traders

* Guggenheim launches new multi-strategy hedge fund

* Plans to hire up to 150 traders, sees attractive timing

* Financial regulation pressures prop trading, hedge funds
(Adds manager quotes, details of hiring plans)

NEW YORK, March 3 (Reuters) – Boutique bank Guggenheim
Partners LLC plans to hire as many as 150 traders for its new
fund, recruiting talent from banks’ proprietary desks and
smaller hedge funds in the face of new U.S. regulations.

Guggenheim Global Trading LLC, launched by managing
partners Loren Katzovitz and Patrick Hughes, has already met
with two dozen trading groups it may hire and will form its
trading operation in the next month or two, Katzovitz told
Reuters on Thursday.

“There is an enormous flow of talent,” he said.

“The opportunity is right, the timing is right and that’s a
direct function of high quality talent being available.”

The fund is targeting trading teams it deems successful and
could both hire traders that lose spots on shrinking banks
proprietary desks and lure away ones now working for banks and
broker dealers, Katzovitz said.

New financial regulation, known as the Volcker rule of the
Dodd-Frank Act, limits the extent to which banks can make bets
with their own money, leading U.S. banks to liquidate their
private equity and prop-trading holdings. [ID:nN01108491]

Separately, smaller hedge funds are feeling the pressure of
new registration regulations and struggle to attract capital.

“Both are providing pools of opportunity for us in terms of
talent,” Katzovitz said.

Guggenheim announced the creation of the unit on Wednesday,
saying it planned to hire 20 to 25 trading teams over the next
year, starting out on an initial investment of $500 million
from the investment bank and asset manager parent. Ultimately
the multi-strategy hedge fund is expected to employ as many as
150 traders and manage as much as $2 billion.

The fund is expected to begin operating in July or August,
Katzovitz said, drawing from a broad menu of investment
strategies, including arbitrage, fundamental and quantitative.

The unit will invest money on behalf of Guggenheim
Partners, its shareholders, affiliates and some institutional
investors. It may later raise funds from third-party investors
if they become Guggenheim’s equity partners, the company said.

The fund will be based in Purchase, New York with planned
offices in Chicago, San Francisco, Geneva and Asia.

Bloomberg originally reported Guggenheim’s plan to hire up
to 150 prop traders earlier on Thursday.
(Reporting by Alina Selyukh; Editing by Maureen Bavdek and
Richard Chang)