Obama’s proposal to ban proprietary trading by banks has led to mixed reactions in the derivatives industry.
Under his proposals banks would not be allowed to conduct proprietary trading using their own balance sheet, and would not be allowed to invest in or own hedge funds and private equity groups.
This could be advantageous to proprietary trading firms and hedge funds as there would be less competition from banks. But critics say it could impede liquidity, thus making it more expensive for hedgers.
Anthony Belchambers, the chief executive of the Futures and Options Association in London, voiced his concerns about what banning proprietary trading might...