What's a 'Prop' Trader Now? --- Banks Move Those Who Wager With Firms' Money to Client-Focused Jobs
Some Wall Street firms aren't waiting until the Volcker rule kicks in to shake up the trading desks that wager the banks' own money.</br></br>As the financial-regulation overhaul heads toward a final vote in the Senate next week, banks are scrambling to find new positions for star proprietary traders, who basically trade company money in hopes of fattening bank profits and their own paychecks but could become an endangered species once the rule takes effect.</br></br>Citigroup Inc. is considering moving roughly two dozen proprietary traders onto desks that trade with company clients, according to people familiar with the situation. Other firms already have switched proprietary traders to customer-focused trading operations.</br></br>The moves don't necessarily mean the days of wagering with a bank's capital are numbered. Many expect an increase in risk-taking in trading operations that cater to clients as traders build an inventory of stocks and bonds to meet demand from hedge funds, money managers and other customers.</br></br>At Morgan Stanley, one proprietary trader whose desk was closed after the financial crisis now trades using capital from a trading desk that serves stock-trading clients, said a person familiar with the matter. Another Morgan Stanley proprietary trader who left for Deutsche Bank AG also essentially bets with the German bank's capital on a trading desk for clients, this person added.