Proprietary desk traders who start their own hedge funds, forced to leave banks by January 1, 2013, when the Volcker Rule goes into effect, are suddenly being thrust into managing a business and its operations as they come face-to-face with Dodd-Frank Act regulations.

“What’s happening now mirrors what happened with star traders with winning strategies ten to 15 years ago when money, ego and opportunity motivated them to leave to start hedge funds,” says Matt Simon, senior analyst at the TABB Group. “Only now they’re being thrown out of larger banks, continuing on as stand-alone hedge funds.”

The industry has changed since then, when the old saw had it that all that was needed to start a fund was two guys and a Bloomberg terminal.

Today there are more regulations to comply with and operating requirements to meet, yet former prop traders will no longer be able to depend on the requisite tools and services they had available at their former employers.

“It’s easy to underestimate all the facets that the bank had taken into account and now they need to recreate,” says Bob Guilbert, managing director at Eze Castle Integration in Boston, which provides IT systems to about 600 hedge funds worldwide. “It’s a shocker; it’s cold water in the face.”