It's about time: Goldman Sachs (NYSE: GS) is closing its proprietary trading operations, as required by the recent financial reform bill. JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), and Bank of America (NYSE: BAC) probably aren't far behind.

What does this mean for banks? Depends on how you look at it.

Goldman doesn't reveal much on its proprietary operations -- trades made with its own money, instead of for clients -- other than that it makes up about 10% of revenue. That, though, doesn't necessary translate into 10% of net income. Proprietary trading can be extremely high-margin stuff, since relatively few people are needed to pull down huge sums. At JPMorgan, for example, derivative trading has been estimated at 8% of revenue, but more than one-quarter of earnings. So while revenue might not take a big hit sans prop trading, net income is another story. Since Goldman remains mum, we'll just have to wait and see.

Then again, declaring the death of prop trading might be foolish. The difference between prop trading and client-driven trading (which is still legal) is a murky gray area. Someone is always on the other side of a trade, and if a bank can make a case that that "someone" is a client, its lawyers should have no problem shuttling it right past regulators. Some trades, in other words, will probably just be relabeled from "proprietary" to "client-driven" without any material change. Traders are much smarter than their notoriously inept regulators, so achieving this should be cakewalk.

I'm not holding my breath that the ban on proprietary trading will spur many changes. If regulators wanted commercial banks to stop acting like hedge funds, they should have broken them up.