Goldman Sachs has limited its clearing services to accounts that manage more than $5 million, says Bloomberg.Until now, the bank has cleared trades for anyone managing $1 million or more.
But earlier this week, Goldman told some clients they’ll need to find new agents.
While the firm continues to clear trades for some accounts below the new limit, it’s winnowing out clients that are riskier, have lower growth prospects and are more retail rather than institutional in focus.
“We are conducting a routine analysis of our business and in some cases the profile of clients was not consistent with our current standards and criteria,” said Ed Canaday, a spokesman for the New York-based bank.
Apparently the decision isn’t a direct reaction to Dodd-Frank but sources told Bloomberg the firm is certainly paying attention to increased regulatory scrutiny.
By increasing the amount of money their clients must have, Goldman is ensuring that its clients are more “accredited” – probably so there are fewer complaints that Goldman trades against its clients. The assumption is basically that if clients have at least $5 million, they know well what they’re doing, and thus the claims that Goldman is ripping them off by trading against them are discredited.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.