The Federal Deposit Insurance Corp. voted on Tuesday to approve a revision of the Post-Crisis Regulation known as the Volcker Rule with five bodies to trade securities with their own funds, banning them from becoming an integral part of the bank's action After the financial crisis, market profit instead of investment on behalf of the customers.
The regulators hope to clarify the definition of proprietary trading and change the prohibition prohibiting banks from making short-term investments with their own capital if they complain that the rules are also complied with intractable and annoying.
"One of the post-crisis reforms, the most difficult to implement for regulators and industry, is the Volcker Rule, which prevents banks from conducting proprietary trading and owns hedge funds and private equity funds" said Jelena McWilliams, chairwoman of the FDIC.
"In fact, the rule has turned out to be so complex that it requires 21
A Goldman Sachs sign is on the company's floor on the New York Stock Exchange floor.
Brendan McDermid | Reuters
The office of auditor approved the revision on Tuesday, while the Federal Reserve and the Securities and Exchange Commission still need to weigh up.
In particular, the final rule removes an "accounting pen" for determining the types of prohibited trade. Instead, regulators abandon more digestible models within the original Volcker rule. Although the extent of the trade ban is not expected to change significantly, banks will gain better guidance for their ability to create markets for clients, preventing banks from investing their own money in hedge funds and private equity funds. An attempt was also made to gut the trading desks at major US banks.
Any rewrite would mean a return for big financial institutions like Goldman Sachs, who have long campaigned for a weakening of the rule. However, without Congressional action, the broader prohibitions of the Volcker rule on proprietary trading remain.