A couple of weeks ago, there was a report on CNBC that Goldman was planning to spin off one of their prop trading units.
According to Charlie Gasparino, it was totally wrong. There are no plans to spin off prop trading, just re-locate traders to departments that are more client-oriented, like asset management.
Gasparino says spinning off prop trading is Goldman’s least likely response to the new regulations.
From Bloomberg News via Wall Street Pit Blog:
“First priority for Goldman Sachs is to find different places for those proprietary traders to work. Second priority is maybe fold the proprietary trading desk… into an existing fund in the asset management division. The third choice they have is they create a separate hedge fund inside the asset management division. They tell me now that’s the least likelihood.”
“What they tell me over there – there was never any plan to spin the equity proprietary trading desk off, meaning sell it, move it out of the firm. That was never in the works.”
So apparently Goldman might fold prop trading, but it’s highly unlikely that they’ll sell it.
What will happen to Goldman’s PE unit, on the other hand, may be a different story.
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