JP Morgan has reportedly closed its proprietary trading desk for commodities, as an early reaction to the US Dodd-Frank Wall Street Reform and Consumer Protection Act. Its fixed income and equities prop desks might follow suit, Bloomberg suggested. JP Morgan did not respond to requests for comment.
The decision could herald a significant shift in the way US financial markets are organised.
The Dodd-Frank Act, passed in July, imposes curbs on US-headquartered banks trading on their own account – a provision known as the Volcker Rule, after the former Federal Reserve chairman Paul Volcker.
But the law’s complex wording, the scope left to regulators to write rules implementing it, and the long period allowed for banks to comply, mean that market participants are only beginning to understand what effects it will have.
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