The biggest banks in the world may be looking at a major shift in their opinion of once admired high risk taking traders. There have been some recent prominent departures by the market’s more freewheeling traders at firms like Barclays and Morgan Stanley. The departures involved personnel closely connected with the financial crisis era.
Hoffman’s exit isn’t an isolated incident. Morgan Stanley’s head of interest rates trading, Glenn Hadden, also made a recent departure. Formerly a trader with Goldman Sachs, Hadden had a reputation as an aggressive risk taker. In 2012, Hadden was actually probed by regulators concerning 2008 US Treasury trades.
Analysts are speculating that the implementation of new financial regulations like the Volcker Rule could be primarily responsible for these departures, especially as banks are looking for more conservative routes to trading. Morgan Stanley CEO James Gorman, Hadden’s former boss, has publicly made it clear of his intent for Morgan to steer clear of risk while crediting the firm’s recent successes to its wealth management unit.
There is serious talk that these shifts in positions are likely to push executives like Hoffman and Hadden into the hedge funds market and similar areas of investment that are not primary targets of regulators.