Citigroup will close its proprietary trading operations next month as it seeks to come into compliance with the upcoming Volcker rule banning the activity.
Equity Principal Strategies will close on Feb. 6. Most of the team's staff will leave the bank, according to an internal memo. The head of the desk, Sutesh Sharma, has been planning a hedge fund, Portman Square Capital, for months.
"Pursuant to various regulatory initiatives and changes, we have made the strategic decision to exit the Principal Strategies business," Derek Bandeen, head of equities at Citi, wrote on Friday. "The team, led by Sutesh Sharma, have been aware of this for some time and have worked diligently to wind down the positions over the last few months."
The Volcker rule will bar banks from proprietary trading, as well as strictly limiting their alternative investment activities.