Displaying items by tag: Volcker rule

Thursday, 28 June 2018 09:35

An Argument for the Volcker Rule

(New York)

The Volcker Rule was one of the more divisive aspects of the Dodd-Frank legislation. The rule virtually outlawed proprietary trading, but arguably led to less liquidity, especially in fixed income markets. Now the rule has been partially pulled back, and there are is a view to gutting it entirely, but some warn about the dangers of doing so. According to the Financial Times, there are big risks to repealing the rule as it would arguably bring back the casino mindset that dominated big bank trading before the Crisis.


FINSUM: Banks are doing very well and the trading system has operated quite smoothly since the introduction of the Volcker Rule. We see no legitimate reason to overturn it.

Published in Eq: Large Cap
Thursday, 31 May 2018 08:35

The Great Volcker Rule Easing Has Begun

(New York)

In what could be a big gain for banks, US regulators are poised to roll back parts of the dreaded Volcker rule, or the Dodd-Frank regulation that virtually ended proprietary trading on Wall Street. One of the big points of loosening is that it will no longer be assumed that if a position is held for less than 60 days that it is a violation of the rule. Banks will also be able to demonstrate that they are market-making rather than proprietary trading much more simply.


FINSUM: Banks have long complained that the Volcker Rule meant they could not provide as much fixed income liquidity to markets as they once did. That should change now, theoretically.

Published in Eq: Large Cap

(New York)

The Trump era of deregulation is really starting to play out for the financial services industry. On top of the collapse of the Volcker rule, banks might be about to enjoy a major concession from regulators: the assumption that short-term trades are automatically a violation of the rule. The Fed and other regulators are planning to drop the assumption that a position held by a bank for less than 60 days is a violation of the Volcker rule.


FINSUM: This would be a major development as banks would be left to comply with the rule on their own terms. That shifts the burden of proof onto regulators, who would now need to prove a trade was a violation.

Published in Eq: Large Cap

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