Lunchtime Links: Death of the prop trader and rumours of a London bonus cap at Goldman

While the world awaits the fourth quarter results of Goldman Sachs, a rumour has emerged that the firm intends to apply a one year bonus cap on its staff in London. Mark Kleinman at Sky News says he's learned of the cap from secret sources and that it won't be announced in today's earnings, but divulged to employees next week. If true, it would help explain why Goldman has delayed announcing bonuses.

Separately, Goldman may be disproportionately hit by Obama's nascent controls on proprietary trading, which the Financial Times says will include, 'include size and complexity limits.'

Alphaville points out that according to ZeroHedge, prop trading accounts for 12% of Goldman's revenues. Other banks are less exposed - Morgan Stanley closed all but one of its prop desks in 2008 and emphasised yesterday that it has no intention of resurrecting a full prop trading business anytime in the future.

Whether Obama's limits will really impact prop trading jobs is questionable though.

Heidrick & Struggles recently reported that banks have been hiring prop traders back from hedge funds, and as we noted in October, banks have vigorously embraced a new style of prop trading in which they take positions alongside customer flow. Yves Smith at Naked Capitalism notes that prop trading restrictions in the US will merely push activity overseas. Unless the FSA jumps on the bad wagon (not out of the question), Obama's restrictions could even create prop jobs in London.

Is Obama trying to cut Goldman down to size? (Pestowire)

"I spent 12 years in the City: in the first year I got a bonus of 14,000, the next year it was 55,000, then 100,000 and in my last two years I got bonuses of 500,000." (The Times)

Marcus Agius says this year's BarCap bonus round will be very different to all that have preceded it. (eFinancialNews)

Jefferies has hired 100 people in Europe over the past year, and plans to continue expanding. (Wall Street Journal)

Beware colleagues with wires sticking out their shirts. (Wall Street Journal)