Volcker Rule tweak gets green light

Post-GFC legislation that stopped big Wall Street banks from using their customers' money to invest in risky trades has seen a revision that could relax some of the restrictions.

On October 8, five United Stated agencies approved the changes to the Volcker Rule which were floated last year.

"Under the revised rule, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements," the five agencies said in a combined statement.

"The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law."

The rules come into effect on January 1 next year and have a compliance date of 1 January  2021.

The five agencies whose approval was needed include:  Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

The Volcker Rule is the section 619 of the Dodd-Frank Wall Street Reform Act, 2010 named after former Fed chair Paul Volcker who proposed the restrictions on speculative trading by big banks as a part of Barrack Obama's economic advisory panel.

Obama endorsed it in 2010 and the five agencies approved final regulations in 2013.

Read more: Volcker RuleBarrack ObamaDodd-Frank Wall Street Reform ActCommodity Futures Trading CommissionFederal Deposit Insurance CorporationFederal Reserve BoardPaul Volcker
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