Thursday, 21 August 2014
Last updated 6 hours ago
Aug 6 2010 | 3:11am ET
The future of Goldman Sachs’ chief proprietary trading business is set to be announced today, but the Wall Street giant may not be spinning off the desk, after all.
Transforming Goldman Sachs Principal Strategies into an independent hedge fund is the least attractive of the three options the firm is considering, Dow Jones Newswires reports. Despite reports that a spin-off is exactly what Goldman was considering, a source tells Dow Jones that a spin-off isn’t likely.
GSIP may still become a hedge fund—but an in-house hedge fund. Another option Goldman is considering is moving the desk into its asset management business, where it would have to raise outside capital. Under the recently-passed Volcker rule, banks will be barred from proprietary trading, but will be allowed to invest up to 3% of their capital in hedge funds and private equity funds.
Goldman may also choose to simply shut the desk, Dow Jones reports. But whichever of the three options it chooses, the fact that Goldman is doing anything is music to Sen. Christopher Dodd’s ears.
The retiring Connecticut Democrat shepherded the financial regulation reform law through the Senate, and said he is pleased that Goldman is turning away from its hedge fund tendencies.
“It sounds clearly like this is a reaction,” Dodd told Bloomberg News. “I’m glad to hear it. Nothing I’d like to see more than Goldman Sachs become Goldman Sachs again, instead of the hedge fund that it had become.”
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note