Now that the so-called Volcker rule has been included in the new financial reform legislation, Goldman Sachs (NYSE:GS) is thinking about responding by selling its proprietary trading business as one of its options.
Revenue from the unit reportedly accounted for about 10 percent of the revenue when the economic boom was at its highest levels. The assumption would be under normal economic conditions it accounted for about 5 to 7 percent of overall revenue. Goldman has never revealed how much the unit brings into the company.
No matter, a spokesman for Goldman said, "We're considering our options, but clearly we're going to comply with the legislation."
The proprietary unit is known as Goldman Sachs Principal Strategies (GSPS), and one option being considered is to place the division into an external fund, where Goldman funds would replace outside investors.
Another option would be to shut down the trading desk altogether, but that seems the least likely of directions Goldman will take.
Possibly the option that makes the most sense would be one in which the company places it into Goldman Sachs Asset Management. The reason for that making the most sense is it has transferred 50 percent of the unit there already several years ago.
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