Tuesday, 22 July 2014
Last updated 4 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.”
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…