Reforms spur Wall Street shake-up

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The Independent Online

US financial reforms are forcing a rethink at Wall Street's biggest banks, with Goldman Sachs and Morgan Stanley expected to shake up their businesses in light of the bill which was signed in law by President Barack Obama last month.

Goldman is looking to hive off its proprietary trading business, which makes bets with the bank's own money, into an outside fund or into its asset management arm, according to US reports.

The new Dodd-Frank Act prohibits banks from engaging in proprietary trading. Although the restrictions are to be phased in over several years, Wall Street firms have already begun scaling back or restructuring their businesses.

Meanwhile, Morgan Stanley, also spurred by the reforms, was said to be close to giving up control of FrontPoint, its in-house hedge fund. The bank acquired the business in 2006, and was reported be seeking to scale back its investment to between 20 and 25 per cent.