Volcker Rule Not as Damaging as First Feared

The 900-plus page Volcker rule regulators released last week will not impact big bank trading revenues as much as banks had feared, said industry executives and consultants who have finally plowed through the rule.

While the U.S. rule bans banks from making blatant bets on securities or other assets, it gives them leeway to make judgments, such as how many assets they should buy in anticipation of customer demand. Banks had worried they would have much less leeway that what is being allowedfu.

The final rule, required by the 2010 Dodd-Frank financial reform law, also allows banks to protect themselves by hedging against price changes in groups of securities, loans, or other assets, instead of having to hedge individual securities as some bankers had feared.

Reuters

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