A proprietary trading desk leverages the firm's capital to invest in
global markets. Traders on the desk don't directly interact with the
bank's clients; instead, they deal with other sell-side firms in the
market to provide incoming research and facilitate trade executions,
acting like an internal hedge fund within the firm.
Wall Street firms can't run from their past leveraged state fast enough these day, as leverage has proved
to be a double-edged sword for investment banks, with the borrowed
capital that sent profitability soaring before the credit crunch swinging around to wipe out years of profits in just under 18 months.
The members of J.P. Morgan's proprietary trading desk will be
transferred to other desks that trade equities, fixed income, foreign
exchange, commodities or emerging markets on the bank's own account, or they will be laid off. -
George WhiteSee Bloomberg story
J.P. Morgan Chase & Co. CEO Jamie Dimon has set his sights on quickly deleveraging the firm by closing its global proprietary trading desk, according to Bloomberg.
