Hedge Funds profit from Volcker
As the populist bore that is financial regulation continues to trudge along, we have early results of predictions most of us made months ago. As proprietary trading by the major investment banks winds down, hedge funds are set to pounce on the available glut of trading talent.
In fact, the same hedge funds which were vilified as the destroyers of the American economy will now be "punished" by the Dodd-Frank Act to the tune of restocking their ranks with the best prop traders that Bulge Brackets can no longer use themselves.
Goldman, is one of the first banks attempting to protect its territory by spinning off Goldman Sachs Principal Strategies (GSPS). Others will emerge with similar plans, but don't expect it to be easy.
Much like Major League Baseball, most cannot simply emulate the Yankees. Most "teams" will wind up letting their "free agents" (prop traders) test the waters.
This opens up room for hedge funds to build from strength in recruiting the experienced talent they want and need for their trading operations .
The chance to cherry pick top talent will have hedge fund bosses grinning like Jack Nicholson and rubbing their palms together to the point a dead skin fire breaks out. This news is as good a prospective investor pitch for hedge funds as anything in recent memory.
Unfortunately for aspiring trader monkeys, this news signifies a further step towards specialization in trading. With more and more experienced traders fighting over less available spots we can be sure that performance based compensatory methods will become even more of the norm and that breaking in without a track record of success will be that much tougher.
As for our favorite WSO trader train question...YES...you will be expected to know a lot more math and programming going forward.
Make way for the modern day bucket shop, coming to a 12 x 16 storage locker in a skyscraper near you...
BB wont let go their top traders
Yea it's going to be interesting trying to get an internship working for a prop trading group next summer...
Ah, how the rich get richer.
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