Goldman Sachs to Close Fixed-Income Prop-Trading Group

Goldman Sachs Group Inc., the U.S. bank that relies on fixed-income trading for the largest portion of its revenue, will shut its Global Macro Proprietary Trading desk, a person with knowledge of the decision said.

The eight-person desk, which trades currencies and stocks as well as products tied to interest rates and other fixed- income markets, will close in the days ahead, said the person, who declined to be named because the decision wasn’t public. Stephen Cohen, a spokesman for New York-based Goldman Sachs, declined to comment.

“Keeping the prop business going will have little benefit and closing it will be seen as a positive move to comply with Dodd-Frank,” said Christopher Wheeler, a London-based analyst with Mediobanca SpA, who has a “neutral” recommendation on Goldman Sachs.

Morgan Stanley and JPMorgan Chase & Co. are among Wall Street firms breaking off or winding down such trading units to comply with the Volcker rule, a provision of the Dodd-Frank financial law that prohibits banks from betting capital for their own accounts. The intent was to avert losses that might cause the collapse of firms and the financial system.

The group reported results as part of Goldman Sachs’s fixed-income trading division, the person said. That division generated revenue of $13.7 billion in 2010, 35 percent of the firm’s total.

The Wall Street Journal reported the decision to close the trading desk yesterday.