Tuesday, August 31, 2010

JP Morgan closing down commodity prop trading to comply with Volker rule

The company said it will be closing fixed income and equity prop trading next.

It sounds too good to be true, right?

Well it probably is. That's because most of these traders will end up at hedge funds. The only really effective way to end all this speculation is to ban it and I don't see that happening anytime soon.

Here's the story.


Tom Hickey said...

Mike, I doubt it would be possible politically to ban it effectively. The "ban" would end up with so many loop holes as to be meaningless. But it could be taxed out of existence.

Matt Franko said...

I think getting the Swaps Dealers reclassified from "commercials" back to "speculators" and maintaining the open interest limits for the specs would go a long way to kicking the banksters out of critical commodities markets for food and energy.

is a background article about how this 'loophole' came about. The whole commodities market has been corrupted and nothing has really been done even to this day.

Excerpt:"Sen. Boxer voiced concern for what she called the “Enron loophole” that allows swap dealers to operate without federal oversight. (She was referring to specific executive actions, beyond those detailed here, initiated by former CFTC Chair Wendy Graham, as well as specific legislative assistance sponsored in Congress by Senator Phil Graham while his wife sat on Enron’s board, that insured that neither swaps nor swap dealers would ever be accountable to federal or state regulatory oversight.) Senator Boxer intends to try to narrow this loophole and may feel that appointing Sommers, the former Chief US Lobbyist for the afore mentioned International Swap and Derivatives Association, to the CFTC Commissioner’s post might be akin handing the fox the keys to the henhouse."