Tracy Corrigan is a columnist and assistant editor of the Daily Telegraph, who writes mainly on business and finance.  She was previously with the Financial Times, most recently as head of the Lex Column. 

So.  Farewell then, proprietary trader

Last week it was the bank levy, this week President Obama has proprietary trading in his sights.  It is an obvious target.  Proprietary traders use banks' own capital to take positions in the market .  It is by definition a risky business, but then banking is about taking risk. ( After all, if banks didn't take any risk, they wouldn't lend any money to anyone, and that is hardly the political objective of financial reform.) 

However, proprietary trading has always been controversial, not least among banks' own clients, since it means that banks may be trading against their customers' positions.  It also contributes to volatility in bank earnings, since it can produce big gains one quarter and big losses the next.  Proponents will argue that it is a perfectly acceptable activity in a well managed bank.  The problem is that such institutions have proved to be fewer in number than we originally thought. 

Even without fresh action from President Obama, proprietary trading is set to decline as stricter capital requirements hit riskier activities. 

It is hard to make a convincing case that proprietary trading is a core part of banks' business, especially now we realise that business is underwritten by the taxpayer.  It used to be argued that proprietary trading helped make markets more liquid, but these days proprietary trading desks are making the same sorts of bets as hedge funds, which as (mostly) private partnerships without state support, are much more appropriate vehicles for this sort of risk-taking. 

Still, as I sit at my desk on the old Salomon Brothers trading floor, I am moved to mark the passing of the proprietary trader (with apologies to E. J. Thribb of Private Eye).