Goldman To End Prop Trading In CLO Debt
A stunning development, which could be a watershed event for the banks to-date relentless refusal to budge on the issue of prop trading, better known as taxpayer/discount window backstopped gambling. CLO prop today. All prop tomorrow?
Bloomberg's Christine Harper reports:
Goldman Sachs Group Inc., the securities firm that makes about 10 percent of its revenue from trades on its own behalf, is ceasing proprietary trading in one type of structured debt, according to a person close to the firm.
A group of traders who were focused on making bets on collateralized loan obligations with the New York-based firm's own money are now handling trades for clients, the person said, speaking anonymously because the plans aren't public. CLOs are bonds backed by pools of corporate loans. Andrea Rachman, a spokeswoman for Goldman Sachs, declined to comment.
Goldman Sachs, the most profitable Wall Street firm, merged the proprietary trading desk with the team that handles transactions for clients as it wound down the positions in the proprietary trading book, the person said. Both groups were run by Gerald Ouderkirk, who was promoted to managing director in October 2006.