How do investment banks view hedge funds?
Many banks view hedge funds as a lifeboat. To the extent that they have to push out proprietary trading, they see hedge funds as a place for talented personnel with whom they don’t want to lose a relationship.
Although they are losing them as internal prop traders, they are gaining them as clients. That is a trade-off they don’t want but it is better than no trade-off at all.
Hedge funds continue to be important clients of the broker