Photo: Bloomberg Markets Magazine
Goldman Sachs is shuttering its super-profitable Global Macro Prop Trading desk to comply with the Volcker Rule, according to Bloomberg.The eight-person desk, which is part of the bank’s fixed income division and trades “currencies and stocks as well as products tied to interest rates and other fixed- income markets,” will shut down soon — in days apparently.
Some of the traders will leave the company, while Karl Devine and his four London-based traders are in talks to move to hedge funds there — perhaps Brevan Howard — according to the WSJ.
No word on where the New York team will go, if anywhere.
Goldman already closed its equity prop-trading unit, Goldman Sachs Principal Strategies, last year.
The closure of both these desks shows the bank’s effort to comply with the Volcker Rule and limits on trading with the firm’s capital. Morgan Sze, the global head of principal strategies, launched his own Hong-Kong based fund in December last year with 12 Goldman prop traders. Others went to KKR.
The former head of the desk, Pierre Henri Flamand, retired from the bank and started his own hedge fund too.
But it’s important to note that though Goldman (and other banks) are shutting prop desks to comply with Fin Reg, it doesn’t mean that they’ve shut down the practice of trading with the bank’s cash altogether — they’ve just figured out how to exploit the Volcker loophole, and transported their remaining prop traders into client-based units.
And bankers haven’t been quiet about their intention to take on proprietary positions without breaking the new rules.
In fact Morgan Stanley, which is currently in the process of spinning off one of its prop-trading groups, Process Driven Trading, may convert its Equity Trading Lab — another prop desk — into an electronic client-trading unit.
Anyway, now that Global Macro and Principal Strategies have been shuttered, that still leaves one: Special Situations.