Do Any Banks Still have Prop Desks?
Just wanted to start a discussion around bank prop desks and whether any parts have survived.
I've heard that some banks have moved parts of their prop desks into their treasury/liquidity/funding desks ie London Whale. Is this true across most of the BB's as a core function? or is it more adhoc? Did banks move ex-prop traders there?
I've also heard that some of the foreign banks are under different regulations so might still have desks outside of Volcker. (RBC had GAT, but I can't find any post 2014 articles. I've seen some people with the "Discretionary Capital Group" title on Linkedin, but nothing definitive).
If prop desks are 100% dead, what other desks offer the most similar experience (ie have greatest leeway on forming views and executing trades based on them)?
I think there are some smaller prop books floating here and there, I believe there are some loopholes that still allows for some of these to exist, but there arent large prop teams that manage tons of capital anymore on the sell side.
Tbh the outright bans on prop/Volcker are just half the equation, because I think there will always be loopholes that you can work around, but just as big of an issue if not bigger is the capital requirements, banks just dont want to hold as much risk on their books these days even on the sellside flow books, and it has a very noticeable impact on liquidity and transaction costs.
GS & MS, and the Canadian Banks still prop trade commodities
Yep and they do have physical metals inventory stored in warehouses (ally, steel etc)
As someone else pointed out Volcker really isn't the issue. You can always (easily) find a way to put a view on through your hedging activity if you trade a product that is anything less than perfectly liquid (i.e. cash rates, equities, FX). The much bigger problem is capital requirements.
Have banks gotten rid of their prop desks yet? (Originally Posted: 02/18/2013)
There's been discussions on this but all of them are pretty dated now. Have the bulge bracket banks already gotten rid of their prop desks? Or have they figured out a way to skirt around the Volcker rule?
from what i've read It's now just called multi strategy investing- Goldman has one billion allocated in MSI with no client activity.
Honestly the Volcker rule is so ambiguous that prop trading could never be banned directly from it. Bank will always be trading, but they will also be "hedging" risk that could also happen to be making profit. In other words, direct prop trading may be winding down now, but other types of trading such as flow trading will always exist. I also have a feeling prop trading will eventually come back
I've been wondering about this too
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