P Morgan Chase has notified commodities traders in London that they’ll soon be out of a job, joining a slew of U.S. financial firms that are cutting proprietary-trading divisions because of recent regulatory reforms.
The firm recently informed a group of less than 20 commodities prop traders—who trade for the firm’s own benefit—that their positions are “at risk,” said a person familiar with the matter. The traders can apply for other posts within JP Morgan, this person said, but their current jobs will likely be eliminated within two months.
JP Morgan’s [JPM 36.36 0.51 (+1.42%) ] move is the first in a series of expected cuts to its prop-trading business, which numbers roughly 100 people and accounts for less than 1% of annual revenue, according to people familiar with the matter.
Under the recently-passed “Volcker rule” provision of the Dodd-Frank Act, U.S. banks must curb their prop-trading activities as well as reduce their investments in private equity and hedge funds to minimal levels.
While the rule may take years to be fully interpreted and implemented, some banks have made moves to comply early. LINK
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