Federal Reserve approves simpler 'Volcker Rule' ban on proprietary trading

By Pete Schroeder

WASHINGTON (Reuters) – The Federal Reserve said on Tuesday it had approved a final rule simplifying the ‘Volcker Rule’ ban on proprietary trading, cementing a significant win for banks under the Trump administration.

The Fed was the fifth and final financial regulator to sign off on the changes, which are aimed at making it easier for banks to comply with the rule, established after the 2007-2009 financial crisis, barring them from making profit-seeking trades with customer funds.

The simpler rule takes effect on Jan. 1, 2020, and banks will be given one additional year to comply.

The final version of the rule rewrite is even friendlier to banks than the proposal unveiled in May 2018. After significant industry pushback, regulators agreed to abandon an accounting test aimed at ensuring banks were not engaging in speculative trades. The final version of the new rule drops that test, which banks warned could hinder proper trading in several financial products.

Fed Governor Lael Brainard, who voted in favor of the original proposed rewrite, voted against the final simpler rule on Tuesday. In a statement, she said the final rule “weakens the core protections against speculative trading within the banking federal safety net.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.