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Banking

Wachovia Moves Prop Trading Off Stock Desk

This article appears courtesy of Institutional Investor

Source: Wall Street Letter

Veronica Belitski


Wachovia Securities , the third largest brokerage by assets, has moved its new proprietary trading unit off the equity trading desk in a bid to prevent the perception of front-running and conflicts of interest, traders at the firm said. Although the move affects only about a dozen Baltimore-based traders, it is one of the first big brokerages to install internal controls on trade execution information. Other Wall Street firms could follow as regulatory pressure on the issue appears to increase, lawyers and analysts said.

Securities and Exchange Commission commissioner Annette Nazareth , at the New York Stock Exchange 's regulatory conference this summer, urged firms to ensure that strong information barriers exist between prop traders and their agency counterparts. "The firms are anticipating regulation, and trying to restore confidence in the trading system themselves," said Jacob Zamansky , partner at Zamansky & Associates . There have been no new regulatory changes from the SEC on how trading desks should be structured to avoid conflicts of interest nor is it clear that regulation is imminent, he added.


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