Goldman Plans To Close Prop Trading (For Real This Time)

Tyler Durden's picture


So as long as you do one flow trade a year, you are considered a flow trader? Brilliant.

From Bloomberg:

Goldman Sachs Group Inc. is shutting
its principal-strategies business, a group that makes bets with
the firm’s own capital, to comply with new U.S. rules aimed at
curbing risk, two people with knowledge of the decision said.

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.

Ed Canaday, a spokesman for New York-based Goldman Sachs,
said he couldn’t comment.

Earlier plans for most members of the Principal Strategies
group, led by Hong Kong-based Morgan Sze, to leave together and
form a hedge fund were shelved, people with knowledge of the
matter said. Now Sze, 44, may set up a fund with a smaller team
focused on Asia, they said. Employees in London and New York are
considering different options, the people said. The team’s
members in New York, led by Bob Howard, are in talks to join
another asset-management firm, according to two people.

Goldman Sachs, which says about 10 percent of its revenue
comes from proprietary trading, is grappling with a provision of
the Dodd-Frank financial reform act that prohibits banks from
risking capital by betting for their own accounts. JPMorgan
Chase & Co.
plans to close its prop-trading units in response to
the law, signed by President Barack Obama in July. JPMorgan last
month told in-house commodities traders in London that they may
lose their jobs, a person briefed on the matter said this week.

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SpeakerFTD's picture



Should say "may move to a different hedge fund"

knukles's picture said Ed Canaday....

Whatever happened to Lucas Van Pragg was it?

LoneStarHog's picture

How about if We The People just shut down Goldman Sucks?

Bankster T Cubed's picture

I wonder how GFS is gonna account for the profits from their gov't contract to manipulate the markets

Pedro's picture

Okay, WHEN?  Or is it like, a football team winnig 56-0 and saying I'll take out the 1st team to quit running up the score with 1 min left in the 4th quarter?

breezer1's picture

what kind of long weekend would w&ws have if gold made an all time high before close today?

Dagny Taggart's picture this a work-around or a reach-around?

dabullify's picture

Doesn't matter, stock up + $7

Bankster T Cubed's picture

as the source of all their freaking profits, it sure as hell should matter

that the stock is up $7 says more about how _______  GFS trading is than anything else

VWbug's picture

that the stock is up $7 says more about how _______  GFS trading is than anything else

or, more likely, it shows that you have no clue as to what's going on.



Caviar Emptor's picture

Keep in mind, people: as quickly as the banks are shutting US prop desks, they're expanding Asian prop desks. Getting around the Volcker Rule (punishing the audacity of regulation). So expect overnight ramping to expand. 

AccreditedEYE's picture

Expanding indeed. One has to ask oneself, with all of the "agents" The Squid has placed in government, how is it that the banks actually HAVE to move traders and conform? Shouldn't their lobbies have been able to knock this shit down or weaken it into obscurity? After asking yourself that, ask this: "with the U.S. going down in flames (the dollar along with it) and private equity moving across the Pacific like no tomorrow to start Chinese currency funds, could it all have been part of the plan?" The more I think about this crap, the more disgusted I become.

Lord Peter Pipsqueak's picture

I'm sorry, I just don't believe it.JPM now GS shut down prop?No way.

Battleaxe's picture

Yeah right! They're just going out of sight. No reason to be out in the open these days with no real limations on what is legal or improper. Why leave yourself out there for public scrutiny? Not only are the feds not enforcing laws but they are encouraging the fixing of the markets. Why waste energy with sham bookkeeping when you can just do no bookkeeping at all?

Segestan's picture

Sooner or later these banksters are going to get a real lesson from the chicoms, the Asians aren't you're white liberal moron who just buys into every gig.

A_MacLaren's picture

Ummm, is there money to be made in investment banking?
Who beside  GM is going IPO?
Bond floating is THAT busy?

curbyourrisk's picture

Sounds like they are gonna off shore the shit.

RobotTrader's picture

Tough to be bearish when GS and MS are taking off...


huggy_in_london's picture

yeah, right... lets see if their var comes down.  

JR's picture

This is the fifth story with Goldman Sachs as the source on Zero Hedge today.   It is my belief that Goldman would not provide any material unless it was beneficial to Goldman.  Every day I struggle with decisions as to how to move in this economy; what risk to assume; where to go from here. And Goldman – caught red handed in criminal action to implode the economy -- roams free to continue pillaging and increasing its fortunes almost every market day.  And we get the table scraps.

It’s bad enough to have to confront regular government reports that are suspect at best, without Goldman bringing on its own show.  Goldman strategy is to make itself into an indispensable market oracle, explaining its viewpoint with the help of highly paid public relations experts, to direct the markets.  It’s a She said, He said, sort of thing but she has billions in public relations to couch what she’s said.  I’m just a lone investor and I’m supposed to be able to argue where Goldman went wrong. Sheez.

It’s Goldman or us, IMO.



anony's picture

You bet and we know who will win that bet.

Bruno the Bear's picture

I'm kind of sad watching Goldman crash and burn with the rest of Wall Street - who or what can I direct jealousy and envy at nowadays?



VWbug's picture

crash and burn?

not sure what you are seeing...

what i see are a few traders getting 7 and 8 figure severance packages, then moving outside the US or to hedge funds to make more money than ever.

you can see what you want to see i suppose.

a few years from now everyone will realize the new regs didn't do anything positive for anyone, and they'll backtrack, and the prop desks will all be hired back with big up front payments.

reality bitchez.

ToNYC's picture

When their lobbyists finished helping Frank'n Doddstein clarify the FinRegs with no Reg written yet, they created escape hatches and worm holes for all the rules they may write..again with GS lobbyists help. We built this City, on more and more of the same.

centerline's picture

Looks like a GS employee is in the room.  Lots of frivolous junking going on.

vote_libertarian_party's picture

So in other words...the lawyers have the regulatory work around ironed out.


No way they are giving up that business.

JR's picture


Exactly.  "The trick lies in the use of words and phrases which have technical meanings quite different from what they imply to the average citizen.  So keep your eye on the words. They are not meant to explain but to deceive." -- G. Edward Griffin 

The intent of the money scientists who wrote financial “reform” stays the same, only the words are different to confuse and deceive the public so that the people can’t see the truth of what they do. It’s just different words, the false impression of change, the same game -- to serve the private interests of the international financiers at the expense of the people.

All, of course, with the tacit approval of the U.S. Congress, all done with “cold objectivity, immunity to patriotism and indifference to the human condition,” by all parties.

All for ill-gotten wealth and power at someone else’s expense. As Economic Collapse Blog put it: “The amount of money some of these Wall Street hotshots are making is incredible. Back in 2005, the top 25 hedge fund managers earned a total of 9 billion dollars. That would be bad enough, but even in these hard economic times the rich just keep getting richer. One year after the recent financial collapse the top 25 hedge fund managers earned a total of approximately $25 billion. That breaks down to an average of $1 billion each. The truth is that the United States has been experiencing uneven prosperity for quite some time and things just seem to get worse with each passing year.”

And, while the taxpayers were bailing out Goldman Sachs for any losses from its “efforts to promote and sell toxic derivatives all over the world while at the same time betting against those derivatives on the open market” and making billions, U.S. families were losing $6 trillion in housing wealth from what they had just three years ago


vote_libertarian_party's picture

So in other words...the lawyers have the regulatory work around ironed out.


No way they are giving up that business.

vote_libertarian_party's picture

So in other words...the lawyers have the regulatory work around ironed out.


No way they are giving up that business.

prophet's picture

Volker Rule: You may not put capital at risk by trading your own capital inside of your tightly regulated bank, but you can invest it with some other trader in a much less regulated entity? 

Does this increase transparency and reduce risk?

- profd  

knukles's picture

Ah, Mr. Prophet, methinks you just got the "I saw them hide their hemorrhoid under the tablecloth award."

Two Dimensions.

1.  Regulatory purview.  Move the shit off shore where the SEC, DoJ,, have no purview.  As a protected species doing God's (read "gubamint") work, it's all a matter of illusion, form over substance.  Move it off shore, we complied, pay a few more lobbying and campaign dollars.  Bingo.

2.  Who's fucking whom with whose dick?  Maybe I can't do this with my own  money inside my own 4 walls, but what about with a minority owned (think hard little grasshopper; several holding companies, nominees, and differing share classes) but I sure a hell can be an investor of Note.... like with Large Pull... in a vehicle established to run Other People's Money.  I can be a client thereof.

T'is so remedially simple to effect activities such as these when there's superb legal counsel on retainer, connections galore foreign and domestic in governemnts within which the regulatory function has been fully captured. 

The reason that the stock went UP is not that they're giving away, or getting rid of the business, but have now moved it's domicile and business conditions to more favorable climes and structures.... like less regulation.... such that the activities will be More Profitable.

If You think Goldman is leaving a penny on the table, You're the Patsy.

(shaking head, sighing and sadness)

Vampyroteuthis infernalis's picture

Even supposed "high end" services are being outsourced. In this case criminal. The making of a 3rd world nation continues.


-The world is a vampire....


walküre's picture

JPM and GS downsizing their American operations.

That's all we know for sure.

That is concerning.

Irregardless of what anyone thinks about the two corporations, one has to be objective and look at the trend that government has created to drive the business away.

GS stock is up on that news. Is like the market is high fiving GS for getting out of town.

NY and Wall Street are dying. That's what that really means folks. And by extension, America and the American dream are dying. It's over. Truly over. The manufacturing left years ago and now the financial sector. Soon Ford, GM, Boeing, Coke, Walmart and so on will move their HQ out of the US.

Last one out, don't forget to turn off the lights.

America RIP.

anony's picture

Wall Street can't die soon enough.  Maybe one day a real capital markets business will emerge, without 100X leverage, incomprehensible derivatives (even to those who concoct them), bonuses on fake revenue streams, taxpayer bailouts in the trillions

The government didn't drive the business away. The investment banks and mortgage brokers, like Lehman, Merrill Lynch, Countrywide, and others created a monstrous calamity for the world while taking out trillions for themselves. Because of them we are able to, in two years, take into the lexicon "Trillion" without batting an eye. As If.

Like a parasite with a survival instinct, it killed the host and will now move off to another one. And good riddance. Maybe the other countries will learn from what happened here and shut them out for good. Maybe not, but I have a hunch that the Lord Blankfeins of the world already have their next Sting operation on blueprint status and all they need now is the green light.



walküre's picture

One thing we know for sure.

If they're just relocating their prop desks, they're not going to setup shop in Greece!

The Greek hate them and word is spreading.

Chinese want to control the financial markets in Asia, so don't be looking there either. China has gotten the full scope of what these financial tricksters are able to do. They just recently busted this self-made billionaire Investor kid because of fraud. The kid was hiding in Hongkong and they still got 'em.

Oh where oh where can JP and GS open up shop? Not quite sure if they're interested in doing so at all or if they just conceded that the market is done and their focus is shifting to other areas of their business.

Both JP and GS closing prop desks shortly after all stimulus expired, all QE measures have been exhausted.

Look at it from that angle.

ToNYC's picture

Wall Street get-rich -quick through financial engineering designed to skim wealth from less sophisticated capital operators was not the American Dream.

theoilyboy's picture

wait tell me again why we are supposed to be sad that GS is moving?  GS feels to most of us like a plague of locusts leaving a scorched earth behind...  If you are not GS, JPM, or WS there is nothing but carnage left behind.

walküre's picture

Photo finish today. Beautiful, just beautiful. Almost artistic. Way to end the show.

Thank you, Fed and Wall Street.

That was one last great performance. What a way to enter the long weekend and leave people hoping, dreaming and pretending while they spend time with their families or travel around.

Amazingly beautiful what computers can create. Emotions will fly high for sure.

Remember this week, folks. It was almost orgasmic.

bugs_'s picture

"for real this time"


"for real time"