Goldman Sachs may be losing some of its proprietary traders thanks to Volcker rule restrictions on betting the firm's own capital. But the firm is hardly getting out of trading.
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The Goldman Sachs booth on the floor of the New York Stock Exchange
In fact, Goldman has recently given mandates to recruiters to seek out quants for its trading operations in both its Quantitative Investment Strategies group and its high frequency trading operations.
These are high-level positions. The QIS job requires a PhD and at least three years of experience in finance. It involves doing quantitative portfolio research for Goldman’s Algorithmic trading desk, which trades currencies, futures and equities. Basically, these are the guys that program the squid’s tentacles.
The other quant position is at Goldman’s designated market-marker arm at the New York Stock Exchange. This is the gang that runs the high-frequency trading ops of Goldman.
So why is Goldman hiring new quant traders even as it sheds traders from some of its prop trading desks? Because this is a vampire squid, according to a conspiracy theory that has grown up around the latest job postings. The gist of the theory is that Goldman is letting prop traders go in order to appear to comply with Volcker Rule restrictions but hiring traders into asset management to do much of the same kind of work.
“Ridiculous” is how one Goldman insider described the theory. Goldman could just shift the traders from proprietary trading to asset management if it wanted to do so.
That’s certainly true. The version of the Volcker Rule enacted in Dodd-Frank only restricts the amount of capital a bank can risk in prop trading or internal hedge funds. It does not require Goldman to get rid of traders, who could be transferred to client-centered trading.
But if Goldman simply transferred traders to another division, it would surely be accused of merely complying with the letter of Dodd-Frank while violating its spirit. The squid-hunters would say Goldman had found a loophole in the law. So maybe it isn’t so implausible that Goldman would prefer to hire newcomers into these positions.
Or maybe it’s just Goldman going through a normal hiring phase.
Headcount at the firm is up this year.
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