Citigroup (C), the third-largest U.S. bank by assets, has reportedly shut down its $400 million Quantitative Strategies fund, a hedge fund that uses the banks money and mathematical models to bet on stocks, according to Bloomberg News.
The closure comes ahead of fed regulators implementing the Volcker Rule, which is a segment of the new financial regulatory law that forbids banking institutions from proprietary trading.
Citi had previously stated that Shakil Ahmed, the manger of Quantitative Strategies fund, would become head of the bank’s electronic market-making.
“All of the businesses that are not pure asset-management businesses will be shuttered,” Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York, said in a Bloomberg telephone interview. “These pure prop-trading operations, the ones that are not customer-focused at all and are using bank capital, will slowly move to other venues.”
Citi didn’t disclose the performance of Ahmed’s fund, which used “quantitative strategies, developed and administered through proprietary models and technology,” to wager on “exploitable market anomalies and inefficiencies,” according to Citigroup’s website.
Shares of Citi were down 6 cents, or less than one percent, to $39.60 at 11:56 am ET on Thursday. C shares have traded between $36.20 and $51.50 over the last 52 weeks.
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