Bloomberg News reports that Goldman Sachs (GS), the investment bank that makes about 10% of its revenue from trades on its own behalf, will end prop trading in collateralized loan obligations [CLOs], according to a person close to the firm.
The Wall Street firm has already made the move to have its traders handle trades for clients.
Bloomberg: “A group of traders who were focused on making bets on [CLOs, which are debt securities bonds backed by a pool of commercial loans] with the New York-based firm’s own money are now handling trades for clients, the person said, speaking anonymously because the plans aren’t public..Andrea Rachman, a spokeswoman for Goldman Sachs, declined to comment.
Goldman Sachs, the most profitable Wall Street firm, merged the proprietary trading desk with the team that handles transactions for clients as it wound down the positions in the proprietary trading book, the person said. Both groups were run by Gerald Ouderkirk, who was promoted to managing director in October 2006.”
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Goldman will simply rebrand their prop traders as “asset managers” and get them trading managed accounts or some workaround the new rules. There is no way they will dump their prop teams, they simply make too much money from it!