Categories: Politics

Volcker Rule Portends Heightened Oversight of Trades

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Volcker Rule Portends Heightened Oversight of Trades (Bloomberg)

Wall Street faces more intensive government scrutiny of trading after U.S. regulators issued the much-awaited Volcker rule today that is aimed at preventing financial blowups but still leaves many details unclear. The Federal Reserve and Federal Deposit Insurance Corp. (FDIC) voted unanimously to adopt the proprietary trading ban and three other agencies were to complete their approvals by the end of the day. The rule has been contested by JPMorgan Chase & Co., Goldman Sachs Group Inc. and their industry allies for more than three years. Wall Street’s lobbying helped to ease some provisions of the rule, with regulators granting a broader exemption for banks’ market-making desks, on the condition that traders aren’t paid in a way that rewards proprietary trading. The regulation also exempts some securities tied to foreign sovereign debt. But regulators said the final version imposed stricter restrictions on hedging, providing banks less leeway for classifying bets as broad hedges for other risks. To pursue a hedge, banks would need to provide detailed and updated information for review by on-site bank supervisors.

Paul Dykewicz

Paul Dykewicz is the editor of StockInvestor.com and the editorial director of Eagle Financial Publications in Washington, D.C. He writes and edits for the website, as well as edits investment newsletters, time-sensitive trading alerts and other reports published by Eagle. He also is an accomplished, award-winning journalist who has written for Dow Jones, USA Today and other publications, as well as served as business editor of a daily newspaper in Baltimore. In addition, Paul is the author of the inspirational book, "Holy Smokes! Golden Guidance from Notre Dame's Championship Chaplain." He received his MBA in finance from Johns Hopkins University, where he was a two-time president of the school's Finance Club. In addition, Paul has a bachelor's degree from the University of Michigan and a master's degree in journalism from Michigan State University. Outside of work, Paul volunteers with a faith-based organization to assist the poor in Southeast Washington, D.C., to learn personal finance skills to lift themselves out of debt.