Financial Regulatory Forum

Banking on Volcker: Big Crisis, Big Rule

By Thomson Reuters Accelus staff

NEW YORK, Oct. 19 (Business Law Currents) – Banking lawyers should be forgiven if they’re not returning calls right away: they’re busy trying to digest the Volcker Rule (or “the rule”). The proposed rule’s 298-page doorstop represents the collective efforts of the Treasury Department, Fed, FDIC and SEC to implement §619 of the Dodd-Frank Act, which itself added a new §13 to the Bank Holding Company Act of 1956 (the BHC Act). The intent of the Volcker Rule is to “generally prohibit any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a hedge fund or private equity fund (“covered fund”), subject to certain exemptions.”

So does the Volcker Rule satisfy its mandate? To paraphrase ‘The Simpsons’: yes with an “if,” no with an “unless.” The rule carves out significant exemptions from the proscription against proprietary trading, but each of these exceptions has a number of criteria required to take advantage of the exemption. Moreover, a number of the rule’s measures provide for rebuttable presumptions of non-compliance for certain types of trading activity. (more…)

EU unveils plan to clamp down on derivatives trading

A woman walks past a branch of French savings bank Caisse d'Epargne in Bouvigal, near Paris, October 17, 2008. Caisse d'Epargne merged with Banque Populaire to become the country's second-largest retail bank, said last year it had made a 600-million-euro ($808.1 million) trading loss on share derivatives. (File Photo) REUTERS/Benoit Tessier (FRANCE) By John O’Donnell
BRUSSELS, Oct 20 (Reuters) – The European Commission unveiled plans on Tuesday to drive more trading in derivatives onto exchanges and under the gaze of regulators, publishing a raft of proposed new rules.

(more…)

  •