Forget the recent bankruptcy of Lehman Brothers and the fire sales of Bear Stearns and Merrill Lynch. Now is a great time to start a broker-dealer, says Jason Rok. Rok, formerly COO at JNF Asset Management and previously a managing director at Cantor Fitzgerald, is currently consulting. Over the last 23 years, he has launched, built, managed and operated various businesses ranging from hedge funds to structured finance. Rok recently spoke with TheStreet.com and explained why he sees opportunity in this market instead of despair. TheStreet.com: What motivates finance executives to leave a comfortable, secure job in this environment to start up something new? Rok: There are a lot of creative people leaving old jobs to start to start new firms. Some of these people were squeezed out of there old firms but many are just choosing to leave because they don't like the direction or rules at their old institutions. Let's face it, Wall Street is full of people that constantly evaluate markets in search of an opportunity and this is no different.
Why now? We've seen the demise of Bear Stearns, which was sold to JPMorgan Chase (JPM), and Lehman Brothers' bankruptcy. Merrill Lynch was sold in a fire sale to Bank of America (BAC). It seems like the industry is contracting, not expanding. There have always been firms opening and closing on Wall Street. However, many of the traditional barriers have changed because the dynamics of the market have changed and it has become a much more level playing field as a result. First, acquiring talent is easier because people either want to or need to make a change so you don't have to offer guarantees for them to leave their old job and to take a chance on a new firm. Less capital is needed because everyone is reducing risk and moving towards more of a riskless principal model. Even those positioning bonds don't need to take excessive risk to make a trade happen.