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JPMorgan Chase's

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trading desk has become the latest victim of prop-shop chopping to comply with financial reform rules.

But JPMorgan's trading businesses won't be dramatically affected by the change, according to someone familiar with the situation, since it's only getting rid of a handful of people who take capital from the bank's balance sheet and use it expressly for profiting. The bulk of its trading operation, which delivered about $22 billion in revenue last year, will remain in tact.

On Tuesday, word quickly spread through the market that JPMorgan would shut down its prop-trading operations, following a


report in the late afternoon. JPMorgan's storied investment banking division will begin by winding down commodities trading, the smallest of its three prop-trading operations. It will later shut down the fixed-income and equities trading divisions, which are larger and deliver more revenue.

A spokeswoman declined to comment.

JPMorgan has kept its prop trading relatively small. The bulk of its trading operation comes from what is known as "flow" -- providing liquidity for client trades.

The news that the prop-trading operations would be shut down wasn't surprising, since big banks must divest their proprietary trading divisions and much of their hedge-fund and private-equity assets to comply with financial reform. The so-called Volcker rule has led

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to begin the process of divesting or winding down affected businesses. Banks affected by the change, including

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, are also reportedly trying to move proprietary traders into asset-management roles instead.

Perhaps more importantly, big banks are also searching for new ways to make up for lost revenue. Goldman, for instance, has moved into derivatives clearing and market-making. But it's unclear how far banks can go in using balance-sheet funds for businesses that can technically be defined as proprietary trading - whether market-making or purchasing hard assets to hold in inventory for clients. There stands to be some uncertainty until regulators outline a precise definition of

what counts as "proprietary trading."

However, the JPMorgan source says there's little doubt that Volcker only applies to a narrow view of prop trading: "When Volcker said, 'I know it when I see it,' that's what he meant," said the source, who wasn't authorized to speak publicly about the situation.

JPMorgan's investment bank has one of the largest trading operations among the big Wall Street firms, though most of it isn't considered "proprietary trading."

During the first six months of the year, the investment bank delivered $14.7 billion in revenue and $3.9 billion in profits, nearly 50% of JPMorgan's entire bottom line. The bank doesn't release specific figures on prop-trading, though the bulk of the trading revenue came from fixed-income and equities, while the commodities business has had trouble keeping up.

Less than 20 staffers in that division stand to be laid off in the near-term, with most of them based in the U.K. The business is no stranger to headcount reductions lately. JPMorgan's $1.6 billion acquisition of RBS Sempra's commodities division on July 1 led to some overlap, with some traders leaving voluntarily and others being pushed out.

During the second quarter, a coal trader made a bad bet, costing the company $130 million. The trader, Chan Bhima,

already made plans to depart JPMorgan.

Sources inside the bank do not expect the removal of its fixed-income or equities prop desks to affect more than a handful of employees. JPMorgan is offering prop traders the chance to apply for other jobs within the bank.

JPMorgan was up 1.5% at $36.38 in late-afternoon trading, on a

generally positive day for bank stocks.

--Written by Lauren Tara LaCapra in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.