JPMorgan winds down prop trading to meet Volcker rule

WALL STREET titan JPMorgan Chase has told 20 London-based traders their jobs are at risk after deciding to wind down its global commodities proprietary trading business.

JPMorgan is the latest investment bank to act on US President Barack Obama’s so-called “Volcker rule”, which requires institutions to hold no more than three per cent of their core capital in hedge funds or private equity. Goldman Sachs has already begun reviewing options for spinning off its prop trading unit.

Around 75 JPMorgan employees worldwide could be affected as it closes off prop trading activities in other areas. Although the bank is ostensibly acting to comply with Obama’s financial crackdown, rivals pointed out JPMorgan suffered multi-million dollar losses betting on the direction of coal prices earlier this year. Blythe Masters, the head of JPMorgan’s global commodities group said the closing of the London desk would not hinder the firm going after “long-term” growth in regions like Asia. Bank of America and Citigroup are also thought to be planning to exit prop trading. Morgan Stanley largely closed down its own-book trading operations two years ago.