Commodities prop traders told their desk to be shut down

* Bank is looking to comply with Volcker rule

NEW YORK Aug 31 (Reuters) - JPMorgan Chase & Co (JPM.N) has told commodities traders who bet with the bank's money that their desk will be shut down, as it looks to comply with new U.S. banking laws, a person briefed on the matter said.

Other proprietary trading desks will also be shut down over time, the person said.

JPMorgan joins a long line of banks that are changing their trading businesses to comply with the Volcker rule, part of a broader financial reform law that limits the extent to which banks can bet with their own capital.

Goldman Sachs Group Inc (GS.N), for example, is looking at turning its proprietary equity trading unit into a hedge fund.

Banks have time to comply with the law, but many are eager to figure out how to deal with the business soon, before antsy traders jump to hedge funds.

JPMorgan's commodities proprietary trading desk has fewer than 20 traders, with one based in the United States and the rest in the United Kingdom, the source said. The U.K.-based traders were informed last week that their jobs may be in jeopardy, in compliance with British law.

Bloomberg, which first reported the story, said that traders will be given a chance to apply for jobs elsewhere in the company.

JPMorgan declined to comment. (Reporting by Dan Wilchins; Editing by Bernard Orr and Matthew Lewis)