We've noted the view that the proposed Volcker Rule, which disallows banks from running proprietary alternative investment units, has already had an effect on the industry. Generally, this has meant more banks shopping around their various units are reconsidering goinh forward with various deals.

At Citigroup (NYSE: C), a group of proprietary traders defected, perhaps sensing a new order. But this doesn't mean that a bank can't benefit from the alternative investments industry. Bloomberg/Business Week reports that Citi plans to double the size of a unit that services pensions and other institutions managing direct hedge fund investments. If it can't actually own and operate such funds, why not get in on the business of making it easier for pensions to do so?

According to the article, Citigroup was approached two years ago by Denmark's largest pension fund to develop a proprietary trading team. The bank "is now expanding the one-stop services, including trade clearing, fund valuation, custody, financing and maintaining managed accounts for such institutional investors to Asia. The services enable them to build in-house hedge fund teams or directly allocate to external fund managers." 

For more:
- here's the Bloomberg/Business Week article

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