Bloomberg is reporting that Goldman Sachs is disbanding its Principal Strategies prop trading unit:
*GOLDMAN SACHS SAID TO BE DISBANDING PRINCIPAL STRATEGIES UNIT
*GOLDMAN PRINCIPAL STRATEGIES HEAD SZE MAY START A HEDGE FUND
*GOLDMAN PRINCIPAL STRATEGIES TRADERS IN NY MAY JOIN OTHER FIRM
Wall Street’s most profitable investment bank plans to hold off on announcing the wind-down while the 65 to 70 members of the global unit seek new jobs, the people said, speaking anonymously because the internal discussions about the process are confidential. Some traders and support staff may get roles within the firm, while a team in Asia may raise money for a new hedge fund, the people said.
This follows the news earlier this week that JP Morgan was planning to shutter all of its own prop desks, starting with commodities trading with fixed income and equities to follow.
The FinReg bill passed in July included a weakened version of the Volcker Rule, which called for banks to no longer trade on their own accounts.
On the Goldman front, Bloomberg told us a month ago that Morgan Sze, the Hong Kong-based head of the prop unit, was looking to turn his division into an independent fund and raise outside capital.
Maybe that’s now actually happening. If not, Bloomberg could always run the story again in a month’s time.
Related links:
Two years and a Volcker Rule later – FT Alphaville
More on overcoming the Volcker Rule – FT Alphaville