Is Prop Trading at Banks Dead?

[jdmc45]

I was wondering what the general consensus on prop trading at investment banks is?

There has been many news articles detailing the closing down of many banks' prop desks at firms from Goldman to Bank of America. This is to comply with the Volcker rule that limits the banks trading its own capital. For some examples;

http://www.wallstreetandtech.com/trading-technology/229219571

http://cachef.ft.com/cms/s/0/6c285214-1cfc-11e0-8c86-00144feab49a.html#axzz1HJuj1g00

http://dealbook.nytimes.com/2010/09/29/bank-of-america-cuts-back-its-prop-trading-desk/

What is your opinion? Is prop trading at banks dead? Will the banks somehow find a way to get around this rule? Will trader relocate to outside the US? What are the career prospects for a budding IB prop trader?

 

[rosehound]

Prop trading is over at IB's

What are the career prospects for a budding IB prop trader?

Luckily the answer to your above question is that they remain virtually unchanged!

 

[Martinghoul]

It looked like it was dying, but looks like a revival more recently. If not dying, it should be dead.

 

[james123]

It looked like it was dying, but looks like a revival more recently. If not dying, it should be dead.

Guys need to face the fact. there is no such thing as day trading. hasnt been for a very very long time.

day traders can only lose money in the long run, and when i mean long - a cycle long enough for all market events to happen. usually no longer than 3-6 months. there are several reasons for this. The banks know this.

 

[Shakone]

Guys need to face the fact. there is no such thing as day trading. hasnt been for a very very long time.

day traders can only lose money in the long run, and when i mean long - a cycle long enough for all market events to happen. usually no longer than 3-6 months. there are several reasons for this. The banks know this.

So that's a fact is it? Evidence for that is where? In a way, market making is prop trading. And since IB's make markets on an intraday basis, then of course day trading does exist and has for a long time. 3-6 months isn't long enough for all market events to happen. Come to think of it, there's nothing in your post that I can agree with.

 

[Black Swan]

It looked like it was dying, but looks like a revival more recently. If not dying, it should be dead.

Volcker rule caused them (IBs) to finance prop set ups outside their main business with venture capital they supply whilst taking equity stakes..

 

[MajorDutch]

I know morgan stanley still have prop traders.

 

[peterbr]

Anybody have any idea how many prop desks there are worldwide ie what is the size of the market?

 

[Martinghoul]

At banks? Very few left now... Been lots of rats abandoning sinking ships recently.

 

[SanMiguel]

Guys need to face the fact. there is no such thing as day trading. hasnt been for a very very long time.

day traders can only lose money in the long run, and when i mean long - a cycle long enough for all market events to happen. usually no longer than 3-6 months. there are several reasons for this. The banks know this.

Just about as long a cycle as we expect you to be on this forum for.

 

[peterbr]

At banks? Very few left now... Been lots of rats abandoning sinking ships recently.

Is that due to the rule changes or because they just cannot make money. Or its all bots now.

 

[Martinghoul]

Is that due to the rule changes or because they just cannot make money. Or its all bots now.

Mostly rule changes plus they ain't getting paid.

 

[SanMiguel]

Is that due to the rule changes or because they just cannot make money. Or its all bots now.

Most of the money is in HFT buying and immediately selling to someone else on the order book and taking the scalp, that as well as HFT momentum bots.
Prop trading is a very wide term though, it doesn;t just mean day traders but can just as easily incorporate swing trading, hedging strategies, volume strategies, dare I say it but teaching trading alongside, etc.