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From Kirsten Bischoff, Opalesque New York:

Throughout 2010 a steady stream of proprietary traders have exited US investment banks, many announcing they will eventually launch hedge funds. Although many of those funds appear to remain in pre-launch phases with rollouts expected well in 2011, the loss of those traders has made the difference in the markets is palpable. Opalesque has noted many managers commenting on the both increased opportunities and the sharper swings due to 'fewer players' in the markets in 2010.

On this prop trading front, the year ended with the news that Goldman trader Morgan Sze would be leaving the firm to launch a Hong Kong based hedge fund, estimated for a $1+bn launch in 2011 (based on a 20-30 person launch team).

While prop trading as a whole has not performed very well over the past two years, and has actually lost money for many banks in that time, the revenues generated over the past twenty years were significant contributors to the gains seen by bank shareholders. Prior to the crisis in 2006, Sze was the top prop trader at Goldman and generated enough income for the bank that his own bonus that year was $100m.

"The Volcker Rule was intended to consider the shareholders, but in the end it may be hurting the shareholders," Ellen Schubert, Chief Advisor to Deloitte's Asset Management Services practice told Opalesque recently. "Shareholders have historically secured diversified revenues from market making, asset manage......................

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