Citigroup reportedly is trying to figure out how to deploy its proprietary traders in light of the newly passed Dodd-Frank financial reform bill.

The financial reform bill limits the amount of proprietary trading a bank can do to 3% of its Tier 1 assets.

One scenario Citi is considering is to move proprietary traders into units that effectively would be startup hedge fund firms, according to a Bloomberg report.

Also under consideration is moving Citi proprietary traders to client accounts, Bloomberg said.

Under the new law, banks can seed hedge fund and private equity firms, but those stakes have to be redeemed later by outside investors.

Earlier this year, Citi sold its $4 billion hedge fund business to SkyBridge Capital as well as some of its private equity businesses.

JPMorgan, on the other hand, was said to be in talks with Brazilian hedge fund firm Gavea Investimentos.

Go to Bloomberg article

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