Goldman Unlikely To Turn Prop. Desk Into Hedge Fund

Aug 24 2010 | 1:12pm ET

It appears increasingly unlikely that Goldman Sachs’ hugely profitable proprietary trading desk will enter the brave new post-Dodd-Frank world as a hedge fund.

The Wall Street giant has no plans—and has never had any plans—to spin off its Goldman Sachs Principal Strategies unit as an independent hedge fund, Fox Business reports. And transforming the group into an internal hedge fund is only marginally more likely.

“First priority for Goldman Sachs is to find different places for those proprietary traders to work,” Fox’s Charles Gasparino reports.  “Second priority is maybe fold the proprietary desk… into an existing fund in the asset management division.”

Only then will Goldman consider creating “a separate hedge fund inside the asset management division,” and Gasparino says “that’s the least likelihood.”

Banks have about four years to end their proprietary trading activities, which are barred under the recently-passed Volcker rule. Goldman may also be reticent about creating an internal hedge fund, because banks are only permitted to invest 3% of their tier-1 capital in alternative investments, meaning that the firm would have to raise a huge amount of outside capital for its former prop. desk.


In Depth

Kettera Q&A: The Advantages of Alternative Investment Platforms

Oct 28 2016 | 5:52pm ET

The past several years have seen a distinct push towards easier and cheaper access...

Lifestyle

Midtown's Plaza District Fades As Manhattan Office Landscape Shifts

Nov 22 2016 | 6:32pm ET

Lower leasing costs, more efficient office space and the hope of projecting an image...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR