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JPMorgan Pretends To Shut Down All Prop Trading Desks, In Latest Smoke Screen Act Of Volcker Rule "Compliance"

Tyler Durden's picture


So JPMorgan fires 20 people in its commodity prop book. What about Sempra Energy, which Dimon purchased recently? Is that getting spun off too? Or are all the 20 whopping newly unemployed advised to seek employment at Sempra? One wonders why JP Morgan named a new global head of commodity strategy today. But yes, let's wave the white flag in the face of the dumb public and pretend we are complying with Volcker. But first, let's have the corpulent Frank in charge of the finreg abortion lisp something on TV about what a great success his capture by Wall Street is proving to be.

From Bloomberg:

JPMorgan Chase & Co., the second- largest U.S. lender by assets, told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all its proprietary trading, according to a person briefed on the matter.

The bank eventually will end all proprietary trading to comply with new curbs on investment banks, said the person, who asked not to be identified because JPMorgan’s decision isn’t public. The New York-based bank will shut proprietary trading in fixed-income and equities later, the person said.

Closing the prop trading desk for commodities affects fewer than 20 traders, including one in the U.S. and the rest in the U.K., the person said. The unit is based in London, where traders on Aug. 27 were given notice, as required by U.K. law, that their jobs may be in jeopardy, according to the person.

Congress passed curbs on financial firms this year designed to prevent a recurrence of the 2008 credit crisis, which almost caused the banking system to collapse. Proprietary trading involves transactions made on behalf of the bank rather than its customers. The curbs on proprietary trading are known as the Volcker rule, named after former Federal Reserve Chairman Paul Volcker, who campaigned for limits on risk-taking by lenders.

Traders will be given a chance to apply for jobs elsewhere in the company, according to the person. JPMorgan spokeswoman Kimberly Weinrick declined to comment.


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Tue, 08/31/2010 - 15:02 | 555843 Sudden Debt
Sudden Debt's picture

The only things that happen naturally in an organization are friction, confusion and malperformance.
Everything else is leadership

Wed, 09/01/2010 - 00:27 | 556021 knukles
knukles's picture


As in did the final form Volcker Rule retain the exemption of Banks to trade Gold and Silver for their own accounts under the pretext that such constitutes mainline business?

Betcha, betcha, betcha.....

In days of yore, t'was rumored Kings to be  stingy, not relinquishing the Kingdom's Purse Strings, Departments of Treasure or Mints (and not as in after dinner, little grasshopper).

Tue, 08/31/2010 - 15:03 | 555851 LePetomane
LePetomane's picture

Oh no!  How will I go on?

Tue, 08/31/2010 - 15:05 | 555857 Voodoo-economist
Voodoo-economist's picture

uhm would that include their notorious PM intervention team?

Tue, 08/31/2010 - 15:07 | 555863 Azannoth
Azannoth's picture

shit if they did that gold would be 2000 in a week :)

Tue, 08/31/2010 - 15:27 | 555944 taraxias
taraxias's picture

Don't get too excited, they are being transfered over to the FED

Tue, 08/31/2010 - 15:07 | 555867 silvertrain
silvertrain's picture

 Going to have to ask the doj on that one, ive been wondering how that investigation is going..

Tue, 08/31/2010 - 15:07 | 555868 Sudden Debt
Sudden Debt's picture

DON'T SAY THESE THINGS! You're scaring the kids!

Tue, 08/31/2010 - 15:24 | 555933 Treeplanter
Treeplanter's picture

It appears they were active today.  Fat chance they go away.  Smoke and mirrors.

Tue, 08/31/2010 - 15:06 | 555859 Man with no name
Tue, 08/31/2010 - 15:13 | 555889 carbonmutant
carbonmutant's picture

"We’ve got too many banks chasing too little volume..." She said.

Tue, 08/31/2010 - 15:34 | 555968 -1Delta
-1Delta's picture

Also look at the ES vol vs Index option volume... all humans are gone

Tue, 08/31/2010 - 15:15 | 555895 Sudden Debt
Sudden Debt's picture

hmm... looks like pretty old news. 3/8/2010

Tue, 08/31/2010 - 15:16 | 555902 Sudden Debt
Sudden Debt's picture

“No one’s going to get screwed. We’re not going to do crazy things on compensation at the end of the year.”






Whenever somebody tells me : don't worry, I WORRY!

Tue, 08/31/2010 - 16:05 | 556088 mephisto
mephisto's picture

“No one’s going to get screwed. We’re not going to do crazy things on compensation at the end of the year, because you won't be here to pay by then.”

Fixed it for you.

Tue, 08/31/2010 - 18:20 | 556413 I am a Man I am...
I am a Man I am Forty's picture

Blythe, such a lying ho, must have been difficult for JD to cut this money losing department.

Tue, 08/31/2010 - 15:25 | 555936 DosZap
DosZap's picture


It's shit like this, that makes me puke........

“Don’t panic,” she said in summing up the 35-minute call, a recording of which was obtained by Bloomberg News. “No one’s going to get screwed. We’re not going to do crazy things on compensation at the end of the year.”

Meanwhile, back at the Gruel bowls..........

Tue, 08/31/2010 - 15:06 | 555860 Ragnarok
Ragnarok's picture

I, as a casual poster on ZH and contributing nothing of substance to the process, demand more details! ;)

Tue, 08/31/2010 - 15:09 | 555875 Sudden Debt
Sudden Debt's picture

and I demand more nudity on this site!

Robotrader where are you!

Tue, 08/31/2010 - 15:26 | 555940 DosZap
DosZap's picture


He Exfoliated............

Tue, 08/31/2010 - 15:30 | 555956 schoolsout
schoolsout's picture

Gold is up today...probably won't see him come around until the next $2 cliff dive...

Tue, 08/31/2010 - 15:06 | 555861 ginunn
ginunn's picture

Will this - should this - have any impact on their massive short positions in the metals precious metals markets?

Tue, 08/31/2010 - 15:23 | 555931 Tarheel
Tarheel's picture

i imagine it would be terrible for gold and silver, but would provide a great buying opp afterwards

Tue, 08/31/2010 - 15:26 | 555942 midtowng
midtowng's picture

Well it certainly helped precious metals today.

Tue, 08/31/2010 - 15:31 | 555961 fuu
fuu's picture

Or the move in metals today helped with the decision to cease operations...

Tue, 08/31/2010 - 15:57 | 556049 knukles
knukles's picture


They're probably trading those positions on behalf of some unknown client account......

Tue, 08/31/2010 - 15:07 | 555862 barthezz
barthezz's picture

Guess I need to start my phd now that the free money is gone or I apply at the FED... BPS is still hiring...

Tue, 08/31/2010 - 15:08 | 555870 BlackBeard
BlackBeard's picture

Sr. Ethics Specialist, fuck yeah!  Kick up the feet....

Tue, 08/31/2010 - 15:14 | 555896 firstdivision
firstdivision's picture

Trader position open as well

Tue, 08/31/2010 - 15:18 | 555912 koaj
koaj's picture

NYFRB Trader job description:

-normal hours are 8-4

-come in and set Atari to "BUY EVERYTHING"

-put your feet up and play Tetris for the rest of the day

-at 4p, turn off Atari

Tue, 08/31/2010 - 15:21 | 555923 What_Me_Worry
What_Me_Worry's picture

What, no porn?  Eff that, I'm going to the SEC then.

Tue, 08/31/2010 - 15:28 | 555945 LePetomane
LePetomane's picture


Tue, 08/31/2010 - 15:23 | 555928 Sudden Debt
Sudden Debt's picture

If you want, I can mail you a PHD template where you can fill in whatever you want and print it.

For the gold seal, you can try to find something in the bonbon box that looks like a seal.

Tue, 08/31/2010 - 15:08 | 555865 Kaiser Sousa
Kaiser Sousa's picture

Tyler -

if true what does this portend for the ownly (freudian slip) 2 forms of real money?


Tue, 08/31/2010 - 15:07 | 555866 Shameful
Shameful's picture

This could be really funny if true.  Would love to see the action of them closing out the commodity positions. Need more info.

Tue, 08/31/2010 - 15:13 | 555887 Sudden Debt
Sudden Debt's picture

Funny thing is that CITI just started a commodity propping desk. Maybe they are playing tag team for the smoke and mirror act?

Tue, 08/31/2010 - 15:14 | 555893 Voodoo-economist
Voodoo-economist's picture

someone closed lots of positions during the last dip, OI plunged quite hard. Maybe related if true. 

Tue, 08/31/2010 - 15:08 | 555871 MrTrader
MrTrader's picture


Tue, 08/31/2010 - 15:11 | 555884 Pladizow
Pladizow's picture

Fuck the P.

Tue, 08/31/2010 - 15:17 | 555906 firstdivision
firstdivision's picture

What if the P = Pomona?

Tue, 08/31/2010 - 15:09 | 555874 plocequ1
plocequ1's picture

What's going to happen to all the Umpa Lumpas that operate these pump machines? I guess they have to beg Willy Wonka to hire them back

Tue, 08/31/2010 - 21:49 | 556717 StychoKiller
StychoKiller's picture

They're finding positions with their cousins, the Grunka-Lunkas, making Slurm.

Tue, 08/31/2010 - 15:10 | 555878 silvertrain
silvertrain's picture

 They are probably just relocating it to Singapore, Isnt that where there new Gold Bullion outlet is supposed to be started in September?

Tue, 08/31/2010 - 15:15 | 555897 What_Me_Worry
What_Me_Worry's picture

What kind of world are we living in where an honest American company, like JPM/Chase's commodity trading unit, can't go on making an honest living in America?  Courtesy of us giving them interest-free, risk-free loans of course.  Yet, it is still a sad day.

I will buy more puts, in their honor.

Tue, 08/31/2010 - 15:15 | 555900 Hansel
Hansel's picture

They don't want in these markets.  They just want a % of whatever you plan on doing in these markets.

Tue, 08/31/2010 - 15:16 | 555901 Paper CRUSHer
Paper CRUSHer's picture

 JPMORGUEN.....the legend lives on.

Tue, 08/31/2010 - 15:20 | 555917 Pondmaster
Pondmaster's picture

EST 11:55 silver prices took a noce slide shortly after lunch (in New Yorks finest cafes )

Tue, 08/31/2010 - 15:21 | 555919 firstdivision
firstdivision's picture

Some great comedy on BBTV with Jeremy Siegel giving his usual stand up routine.

Tue, 08/31/2010 - 15:23 | 555930 aldousd
aldousd's picture

JPM appears, even through the crisis, to be good at anticipating future political fallout. Perhaps this is an indication that prop traders are about to get politically gang raped by the bully pulpit.  I'm not defending them, per se, but they have been politically savvy, and have remained just a few steps ahead of the rest of the pack for the past few years on that front.  This is not a commentary on what a sad state of affairs we're in when politics determines the course a gigantic corporation will take, but simply an observation.

Tue, 08/31/2010 - 15:31 | 555959 No One
No One's picture

I doubt JPM is anticipating anything. I am willing to bet that Obama's team lobbed a friendly call to President Dimon. You know, a little heads up... 

Tue, 08/31/2010 - 16:07 | 556101 aldousd
aldousd's picture

haha, yeah, good point.

Tue, 08/31/2010 - 15:25 | 555938 Sniper
Sniper's picture

Does this include market making? If so, how much of a loss of liquidity are we about to experience?

Tue, 08/31/2010 - 15:29 | 555947 bull-market_3.0
bull-market_3.0's picture

What is wrong with prop traders? Aren't most of you trading from your own desks? 

Tue, 08/31/2010 - 15:30 | 555954 walküre
walküre's picture

If this market was a contender for free style dance moves, it would win hands down.

I'm trying to get jiggy with it but man, that was one stupid roller coaster ride today and the day is not done. It's getting busier, more hectic and more irratic. Summer is definitely gone.

September could go either way. This zig zag motion won't last much longer imo.

This market is acting schizo and needs to get medicated or committed or both.

Tue, 08/31/2010 - 15:31 | 555960 dan22
Tue, 08/31/2010 - 15:36 | 555975 LePetomane
LePetomane's picture

It burst in Feb.

Tue, 08/31/2010 - 15:36 | 555972 william the bastard
william the bastard's picture

They'll all end up at Moody's.

SEC declines to pursue Moody's for fraud over CDO ratings.


Or, the SEC

Tue, 08/31/2010 - 15:44 | 556005 Bankster T Cubed
Bankster T Cubed's picture


Tue, 08/31/2010 - 15:39 | 555984 Hephasteus
Hephasteus's picture

JPMorgan: Dark pool set up in asia. Thanks america. Have fun eating cat food.

Tue, 08/31/2010 - 15:40 | 555986 MiningJunkie
MiningJunkie's picture

So you shut down the N.Y. desk and then enter into a JV offshore with trained chimps pressing the algo-buttons and pooof! Life goes on...

Tue, 08/31/2010 - 15:44 | 556002 Bankster T Cubed
Bankster T Cubed's picture

the offshore chimp operation has probably been operating for years

and has definitely been the place where all manipulations are done

Tue, 08/31/2010 - 15:44 | 556004 John McCloy
John McCloy's picture

  JPM and the rest of them know exactly what is coming to markets. They know first hand the manipulation cannot withstand the deluge of terrible data such as rising unemployment and the falling off of benefits for new 99'ers. 

They also know the only way for them to make money will be on the short side since the recovery never appeared and in order to profit without sending up flags and accusations of taxpayer funded trading they must reduce the appearance of using taxpayer money to profit at the expense of the average citizen. Deflation is here and the money destruction coming in 401ks is going to cause an escalation in populist anger.

Tue, 08/31/2010 - 15:46 | 556011 Quinvarius
Quinvarius's picture

These guys got canned because they lost BILLIONs.  You do not want to be long JPM when the next earnings report comes out.

Tue, 08/31/2010 - 15:50 | 556025 Young
Young's picture

Got any source for your information there?

Tue, 08/31/2010 - 16:00 | 556065 robertocarlos
robertocarlos's picture

Oil down, silver up. 

Tue, 08/31/2010 - 15:51 | 556026 Quinvarius
Quinvarius's picture

Read this from earlier and you will see the tip of the iceberg.

JPM's failed coal trade was only what they have admitted to.  And they are pretending like they unwound it.  Uhhh.  No.


Tue, 08/31/2010 - 15:58 | 556051 Young
Young's picture

Muchos gracias amigo

Tue, 08/31/2010 - 15:58 | 556054 Young
Young's picture

Muchos gracias amigo

Tue, 08/31/2010 - 15:51 | 556027 What_Me_Worry
What_Me_Worry's picture

They manufacture their earnings report, though.  They can just take a few billion from their loss reserves to show a profit, if need be.

Tue, 08/31/2010 - 15:46 | 556013 Rusty Shorts
Tue, 08/31/2010 - 15:50 | 556024 rc whalen
rc whalen's picture

This will take about $2 billion per quarter or 10% out of run rate revenue, but also a lot of risk.  Prop trading and PE has swung from $10 billion in loss to equal profit over past couple of years.  Chris

Tue, 08/31/2010 - 16:07 | 556100 TooBearish
TooBearish's picture

Bove said diminimus does he just take the other side of everyone to have an opinion?

Tue, 08/31/2010 - 16:24 | 556157 Quinvarius
Quinvarius's picture

The prop desk would have been spun off if it had been a money maker and had to be seperated.  No.  They made no money.  They lost money.

Tue, 08/31/2010 - 15:53 | 556031 John McCloy
John McCloy's picture

  That was some intervention there about 5 mins ago. This must be costing a fortune to defend 10,000. This is a very sick and unhealthy market.

Tue, 08/31/2010 - 15:54 | 556040 HelluvaEngineer
HelluvaEngineer's picture

Nice friggin volume spike.  wtf?

Tue, 08/31/2010 - 15:57 | 556045 Yikes
Yikes's picture

And Obambi and the Dem's just don't understand why there is no confidence in the economy and retail investors continue to pull money out of the market. Shear arrogance.

Tue, 08/31/2010 - 15:59 | 556060 robertocarlos
robertocarlos's picture

Easy money at the end of the day. Bet on it closing over 10k.

Tue, 08/31/2010 - 16:13 | 556118 bada boom
bada boom's picture

Hey, why are the moving all that stuff into the building next door?

Tue, 08/31/2010 - 16:17 | 556131 Leo Kolivakis
Leo Kolivakis's picture


I'll have you know that Mr. Dimon has Greek roots and had Jeff Immelt and Seth Klarman as classmates at Harvard Business School. Please stop posting smear on him or JP Morgan. All is good, now stay quiet.


Tue, 08/31/2010 - 18:07 | 556385 Hephasteus
Hephasteus's picture

Get back on that treadmill suckers and get where you need to go.

Don't make me use a 80's music mantage.

Get going!!!

Oh no's I'm in your economy under your glass ceiling being a depressed.

Tue, 08/31/2010 - 20:23 | 556605 ziggy59
ziggy59's picture
Banks post $21.6 billion profit in 2nd quarter Banks post $21.6B profit in Q2, but number of troubled institutions hits 54, FDIC says

On Tuesday August 31, 2010, 10:14 am

WASHINGTON (AP) -- The U.S. banking industry posted its highest quarterly earnings in nearly three years, even as the number of troubled institutions grew by more than 50 in the second quarter.

The Federal Deposit Insurance Corp. says banks overall made $21.6 billion in net income in the April-to-June quarter. That was the highest quarterly level since 2007. Overall, banks lost $4.4 billion in the second quarter of 2009.




Tue, 08/31/2010 - 21:40 | 556707 williambanzai7
williambanzai7's picture

How to put spin on shutting down a crappy business--we were required to do it to comply with law.

Wed, 09/01/2010 - 00:11 | 556932 Hang The Fed
Hang The Fed's picture

Apparently, Dimon never heard the old saying that a rose would still be a rose, by any other name.  That saying also applies to bile and dog shit, just so that I'm being contextually appropriate here.

Wed, 09/01/2010 - 04:46 | 557103 trx
trx's picture

For those who still haven't figured it out, here's a clue: UCITS IV.


(I'll have a new post ready in an hour or two...)



Wed, 09/01/2010 - 11:36 | 557683 trx
trx's picture

And here it is.....

Assets managed by European UCITS III funds have increased to $52.3 billion over the last two years. These special purpose vehicles are about to kill the traditional hedge fund industry, and are emerging as the new generation of sophisticated investment strategies.

“Using cautious estimates, projections for 2012 indicate that over €8,000 billion will be invested in UCITS products, an increase of 60% – from €5,000 billion at end 2007.”


Flight to Mystery
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