Citigroup, Inc (NYSE: C) is considering moving roughly two dozen proprietary traders onto desks that trade with the company’s clients, according to a Monday report from the Wall Street Journal citing anonymous sources.
A number of banks have transitioned their proprietary traders to work with clients as the federal government clamps down on the practice of proprietary trading. Although the move may appear that Citigroup, Inc (NYSE: C) is following suit, the move doesn’t necessary indicate the end of proprietary trading for Citigroup, Inc (NYSE: C).
Many expected that there’s an increase in risk-trading operations which caters to clients as traders build an inventory of stocks and bonds to meet demand from hedge funds, money managers and other customers, the WSJ reported.
At Morgan Stanley (NYSE: MS), one proprietary trader whose desk was shut down after the recession has been moved to another trading desk which serves stock-trading clients. Another Morgan Stanley (NYSE: MS) trader who left for Deutsche Bank bets with German bank’s capital on a trading desk for clients, this person added, the WSJ reported. The source also told the WSJ that a small group of traders at Morgan Stanley (NYSE: MS) who purchase and sell securities using the firm’s money have begun using corporate derivatives to describe their role earlier in the year.
“Certainly, there will be opportunities to put some of these professionals to work doing what they do best in other parts of the firm,” said Joseph Vitale to the WSJ, a partner in the bank-regulatory practice at law firm Schulte Roth & Zabel LLP. “The question is to what extent will they be trading with the house’s money versus client money?”
