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April 3, 2012
Wall Street banks to reshuffle top traders ahead of 'Volcker rule'
Wall Street investment banks are preparing to move some of their top traders into new jobs managing their clients' money as the US gears up for new rules limiting the risk banks can take.
Staff working in banks' "proprietary trading" units that deal using the lenders' own money are being offered the option to transfer to roles in asset management ahead of regulations coming into effect from July 21.
Citigroup, JP Morgan and UBS are among the banks considering putting their proprietary traders into asset management jobs.
Under the rules, banks will still be allowed to run riskier trading strategies if they can get outside investors to back the business instead of using the banks' own capital. Banks have been given two years to replace their own capital with third-party money.
The so-called "Volcker rule" is a key part of the new US regulation brought in since the financial crisis to make banks less risky. It is named after former chairman of the US Federal Reserve Paul Volcker, who proposed the clampdown on proprietary trading.
UBS has looked at moving its equities proprietary trading business into its asset management division and JP Morgan has considered doing the same thing with a range of its own teams.
Many proprietary traders have already opted to leave banks to join hedge funds or to start their own trading businesses.
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