Europe Edges Ahead Amid Prop Trading Muddle

Reuters

Dan Barnes writes in the Financial News today that Investment banks have been cutting back on proprietary trading in Europe ever since the financial crisis struck four years ago.

Branded casino banking, the use of a bank’s own capital to make bets on the market for fat profits, has become deeply politically unpalatable.

But as the regulatory agenda in the US and Europe unfolds, the debate continues over exactly what constitutes the use – or misuse – of a bank’s own capital, and how this activity can be curtailed without threatening what trading banks do on behalf of their clients.

Some banks have already exited entirely: these include HSBC, Credit Suisse and Deutsche Bank. Others, such as Societe Generale, UBS and Morgan Stanley, continue to operate very limited proprietary desks.

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