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TheBlueCat

Death Of The Prop Desk?

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Yesterday, this was being reported as a star trader leaving to set up his own hedge fund presumably because he thought he wasn't being paid enough. It turns out him and his team were sacked. If this is part of a bigger trend, it'll be interesting to see just how many of these people can persuade investors to give them money to play with and whether they can then make a decent return on it.

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Yesterday, this was being reported as a star trader leaving to set up his own hedge fund presumably because he thought he wasn't being paid enough. It turns out him and his team were sacked. If this is part of a bigger trend, it'll be interesting to see just how many of these people can persuade investors to give them money to play with and whether they can then make a decent return on it.

I saw this. It was something to do with the 'Volcker rule'. Not sure how it happened, but this rule seems to have been put into law in the US, which means that banks cannot run speculative trading on their own books to any major extent, which means that these big shot dealers are surplus to requirements.

How did this ever get into law? It reduces profits at the big banks, and losses, making them less likely to fall over. Getting a bonus for the CEO will be possible of course, but a tad harder.

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I saw this. It was something to do with the 'Volcker rule'. Not sure how it happened, but this rule seems to have been put into law in the US, which means that banks cannot run speculative trading on their own books to any major extent, which means that these big shot dealers are surplus to requirements.

How did this ever get into law? It reduces profits at the big banks, and losses, making them less likely to fall over. Getting a bonus for the CEO will be possible of course, but a tad harder.

The specific law is the Dodd Frank act which limits the amount of capital banks can allocate to prop trading. Makes total sense to me, although bringing back the Glass Steagall act would have been even better. It's worth noting though that prop-trading wasn't the biggest part of the financial crisis by a long way.

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The specific law is the Dodd Frank act which limits the amount of capital banks can allocate to prop trading. Makes total sense to me, although bringing back the Glass Steagall act would have been even better. It's worth noting though that prop-trading wasn't the biggest part of the financial crisis by a long way.

I suspect that because it wasnt part of the perceived problem, that Volcker managed to get someone to put this into a bill and get it passed as law. The bankers clearly took their eye off the ball on this one.

Shame they wont be able to use our savings as chips at the roulette wheel anymore. I have to admit that I am a bit astounded that the law appears to be working as well.

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The bankers clearly took their eye off the ball on this one.

I'm not so sure myself, I'd view it more as a sacrificial lamb type thing. Prop desks are always a monumental pain in the butt within a firm and, whilst they can sometimes make a lot of cash compared to the number of people involved, tend not to be a very large chunk of the overall total. It always felt to me that it was a case of giving up the prop desk and hoping that meant no-one would ask about any of the more important stuff.

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And so the clipping of the wings begins ....

Reality bites ...

The FTSE points the way to the inevitable future.

Real Banking (helping the efficient allocation of capital, not gambling) simply isn't as profitable as it was made out to be over the last couple of decades.

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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