Fed gives Banks 2 Years To Meet Volcker Rule

The Federal Reserve granted a fresh concession to banks that are subject to the Volcker rule on Monday, giving them two more years to offload their holdings in collateralized loan obligations to comply with the measure.

The Volcker rule, aimed at banning proprietary trading, would have forced banks to divest their CLO investments, resulting in billions of dollars in losses.

Some industry groups wanted regulators to go further by providing a broad exemption for ownership interests in CLOs.

“We are disappointed that the agencies involved did not use their rule-making authority to provide broad relief from the Volcker rule to legacy CLOs,” said Kenneth Bentsen, president of the Securities Industry and Financial Markets Association, or Sifma. “Sifma strongly believes that regulators should have addressed the problem in a comprehensive, co-ordinated, and conclusive manner yet the statement released today seems to suggest the agencies have taken a different approach.”


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu