JPMorgan knows how to skirt the Volcker rule: keep Highbridge.
Dimon announced today that JPMorgan will be keeping Highbridge Capital, the bank’s hedge fund.
The bank plans to deal with the new Volcker Rule by moving its best prop traders to the asset management division, says Dimon.
“Some are good,” said Dimon.
“They are going to move over to Asset Management and become client-only.”
“We are going to try to keep the best people there.”
This follows news from last month that JPMorgan is shutting down all of its prop trading desks.
Dimon is now the first to officially announce how he will deal with prop traders under the new FinReg rules.
Everyone suspects that Morgan Stanley will spin out FrontPoint, and that Goldman Sachs will shutter their prop trading unit, Principal Strategies – but they haven’t gone on the record with any public confirmations.
However Goldman’s expected handling of the Volcker Rule is pretty similar to what JPMorgan says they’re doing – “gaming” the new regulation by just moving everyone to asset management so they’re trading for clients, not just Goldman.
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