The Royal Bank of Canada is shutting down one of its last proprietary-trading desks and spinning it off into a standalone hedge fund firm.
The Wall Street Journal reported that is planning to transition its New York-based Global Arbitrage and Trading unit into a separate entity at the end of this year. The article added that RBC will likely be an investor in the fund as opposed to an owner to comply with the Volcker Rule, which prohibits banks from making speculative investments—including in hedge funds--that do not benefit their clients.
A trio of RBC employees--proprietary trading desk head Richard Tavoso, co-head Mark Standish and proprietary head trader Ed McBride—will join the new unnamed firm. Other RBC traders and portfolio managers are also expected to leave the bank.