Risk solutions provider, Algorithmics, has cautioned that proprietary trading desks face tougher future as standalone entities under the Dodd Frank bill. The firm has received enquiries from proprietary trading desks that are being spun out from their bank owners as a result of the Volker Rule within the Dodd Frank Act. The Volker Rule bars banks from proprietary trading and significantly restricts their ability to invest in a hedge fund or private equity vehicle. Major banks are spinning out proprietary trading desks and this trend will intensify as the July 2012 deadline imposed by the Dodd Frank Act approaches.
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