Posted on 29-07-2010

Two articles today focus on the plight of investment banks’ prop traders under the Volcker Rule.

On one hand, Bloomberg reports that Citigroup is contemplating moving its prop traders into hedge funds seeded with its own money. Or failing that, it says Citi might even scatter them ‘across the bank’s main client-facing trading operations based on their specialties.’

And on the other hand, Fox Business says Goldman Sachs has already moved half of its prop traders into its asset management business, ‘where they will take market positions while dealing with clients.’

Unfortunately though, prop traders aren’t waiting passively to find which fate is in store for them. The full force of the Volcker Rule may not be felt until 2017, but the Financial Times recently noted the disproportionate number of new hedge funds conceived by former banking traders, Meanwhile, hedge fund headhunters say banks’ prop traders are honestly clamouring to get out.

“People are very excited about the prospect of joining a hedge fund,” says one. “Most of them can’t wait to leave.” 

Source:  eFINANCIALCAREERS     (  Read Article..)

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