Mama bear,
The exchanges need to be there to facilitate normal asset exchange during the conduct of business by individuals and companies.
But, there will be trading. Just because investment banks get it doesn't mean that trading is going to stop. As the article mentions, they are going to fund hedge funds, as it is cheaper as well as easier to hide risks for investors that way.
Start quote:
Investment banks are no longer as confident as they once were of their ability to control trading risks.
Better, then, to take fewer of them?or, at least, to seem to do so. One way to do that is to outsource proprietary trading to a hedge fund. Although still risky (think, for example, of UBS?s $704m losses last year from its investment in LTCM), this strategy has several advantages. It avoids the huge internal pay gap between high-flying proprietary traders and the rest. And it shifts exposure off the balance sheet, so that shareholders are left less aware how much risk their bank is taking.
End quote.
Question is, when is everyone going to get it? That may take a while, I am afraid.
-BGR. |
