Financial Times – Since 2010s introduction of the so-called Volcker rule, Wall Street’s banks have moved fast to drop some of the most prominent vestiges of their past success: their proprietary trading operations.
Banks once dominated bond and equity markets thanks to the operations of such desks – which acted, to all intents and purposes, like internal hedge funds, speculating with a bank’s own capital – but now their presence is barely felt.
Banks once dominated bond and equity markets thanks to the operations of such desks – which acted, to all intents and purposes, like internal hedge funds, speculating with a bank’s own capital – but now their presence is barely felt.
The exit began with Goldman Sachs, which starting in 2010 saw the departures of its three main prop traders and their teams: Pierre-Henri Flamand in Europe left to set up a hedge fund, Edoma Capital; Morgan Sze in Asia departed to establish his hedge fund, Azentus Capital; and Bob Howard in the US left to set up a hedge fund for private equity house KKR.
It was a pattern repeated by peers. Deutsche Bank, Morgan Stanley, Barclays and most recently JPMorgan have all lost top risk takers to the hedge fund industry in the past 18 months.
