In the wake of recent US legislation curbing banks’ investments in hedge funds, JP Morgan is forming a new alternative investment business within its asset-management division to house the bank’s proprietary traders, media reports said, citing an internal memo.

The move follows the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which puts a limit on banks’ ability to trade with their own money.

“As a result of new financial reform regulation in the US, we will transition our proprietary trading teams within the Investment Bank’s Equity, Emerging Markets and Structured Credit businesses to Asset Management and will establish a new alternative investment management group for JP Morgan clients,” Jes Staley, head of the company’s investment bank, and Mary Erdoes, head of asset management, wrote in the memo, reports said.

The transition will take several years and Mike Stewart, co-head of Global Emerging Markets at JP Morgan’s investment bank, will oversee the project.

Commentators and industry figures in the banking and wealth management industry are still working out what will be the exact impact of US legislation that was passed to prevent a repeat of the recent financial crisis. In short, such laws aim to split the more risky, trading-style activities from banks from their retail, deposit-taking sides.