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Our analysis of Bloomberg’s article on when Goldman Sachs ends their proprietary trading

(Last Updated On: September 6, 2010)

Our analysis of Bloomberg’s article on when Goldman Sachs ends their proprietary trading
Here is an article posted by are favourites at Bloomberg. It is the rumoured closing of Goldman’s Sachs prop trading desk.

Goldman Sachs, which says about 10 percent of its revenue comes from proprietary trading, is grappling with a provision of the Dodd-Frank financial-overhaul 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

I would think this is a much higher percentage than 10. They have been rumoured to be pulling in $200 million days so that would easily amount to a much higher percentage off the books.

“What’s motivating people is that they need to know where they are going, and no one wants to be the last group out the door,” Gary Townsend, president of Hill-Townsend Capital LLC, said on Bloomberg Television. “It’s really the personnel decisions that are driving this to happen sooner rather than later.”
These same people being laid off will end up in boutique hedge funds where Goldman Sachs will fund them. As a result, Goldman Sachs will have a heavily vested interest in these funds as they will seed large amounts into them. Essentially will own these new funds or existing ones but will of course be off the the record now.

“It’s a hard capital-raising environment for hedge funds at the moment, even more so for start-ups,…Only a small percentage of funds will be successful in attracting money and I think Goldman guys will potentially be part of that.”
Amen to that. But as said, it will be most likely Goldman Sach directly or indirectly funding these new companies.
“This is the first of many situations,”… “We’re going to see other entities unwind their proprietary trading.”

Sure they will be unwound but will be absorbed by an existing fund or started by another which will be indirectly owned by the Tier One Investment Banks still.
http://www.bloomberg.com/news/2010-09-03/goldman-said-to-shut-principal-strategies-unit-to-comply-with-volcker-rule.html?goback=.gde_2107793_member_28867695

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