London bearing the brunt as JPMorgan axes proprietary trading

The end of proprietary trading, when a bank uses its own money to make big bets on investments, moved a step closer today as JPMorgan axed a key division.

London is bearing the brunt of the Wall Street giant's decision to close its global commodities prop-trading arm, which is headquartered here. Up to 20 London traders have been warned their jobs are immediately at risk.

As many at 75 staff may be affected as JPMorgan winds down other areas of prop trading.

Analysts estimate it could cost the bank as much as $1.4 billion (£1.2 billion) a year in profits. Hundreds of jobs are likely to go as Goldman Sachs, Morgan Stanley and Citigroup must make similar cuts or spin off the businesses.

Goldman employs around 20 prop traders in London.
All US banks must curb prop trading and limit hedge-fund investments by 2012 under the Volcker Rule, drawn up in the wake of the credit crunch.

Critics claim banks put their balance sheets at risk with such investments and they could conflict with clients' interests.

JPMorgan commodity traders reportedly lost $250 million on coal this year.