Prop Trading

Trader: "The Bigger Picture On Oil Is Far More Negative"

"February’s record speculative long position has been roughly halved. The market technicals appear healthy and fresh for a sustained bounce. That’s the short-term outlook. But at some point the much bigger picture will dominate again and that entails a far more negative skew on the situation."

"We're Way Past Humpty Dumpty"

The most basic link in finance is that between risk and reward. Just like alchemists who once sought a path to gold from lead, a great deal of modern finance was built around finding a shortcut between them, but now, what is missing is reward, especially under conditions where there are no longer illusions about risk. We are way, way past Humpty Dumpty time. You can bring back prop trading, but you still have to have asymmetry for banks to trade in it. That ship sailed for good in late July 2011.

Trump Signs Executive Orders Rolling Back Dodd-Frank, Fiduciary Rule

As previewed earlier today, moments ago President signed two executive aimed at starting the process of rolling back the regulatory system put in place after the financial crisis. Among the targets are rules that protect against predatory lenders, force brokers to lower fees for retirees and ban proprietary trading.

Mnuchin Dashes Banker Hopes That Prop Trading Is Coming Back

In follow up remarks to lawmakers, Steven Mnuchin said even banking units that lack a government backstop should be restricted from making speculative trades: "a legal distinction between the insured and non-insured entity is an important factor in eliminating risky activities within the institution that has” insured deposits.

EconMatters's picture

Banks are cheap for a reason, they are not going to be high growers because of longer term structural changes in the Finance world some of which are fallout from the excesses of the Financial Crisis, and some have to do with technological and structural changes within financial markets themselves.