Banks about to get clarity on prop trading


The CFTC sets a December 10 vote on the so-called Volcker rule which is supposed to ban banks from prop trading. It sounded so simple when politicians trumpeted it in 2010, but the reality of what banks do is slightly more complex and the text of the rule has mushroomed to 1K pages. GS, MS, JPM, BAC, and C, among others, will be eager to see what the regulations entail.

Any hopes for a watering-down of the rule likely ended with JPMorgan's $6B London Whale loss.

The SEC indicates it will act on the rule around the same time as the CFTC (3 other agencies must approve as well).

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Comments (8)
  • JohnBinTN
    , contributor
    Comments (4370) | Send Message
     
    A government "rule" mushrooming to 1,000 pages?! Inconceivable! I wonder how many pages the government "rules" for wiping when your done in the restroom are... I'm sure if such a thing existed, it would be at least book-length.

     

    They are masters of obfuscation, diversion, and gobbledygook.
    3 Dec 2013, 03:57 PM Reply Like
  • ote
    , contributor
    Comments (513) | Send Message
     
    The wipe rule is 20 pages plus foot notes.
    3 Dec 2013, 04:06 PM Reply Like
  • The Sociology of Finance
    , contributor
    Comments (955) | Send Message
     
    In all fairness, consider how long a CDO prospectus is. And consider how much documentation would be needed to determine whether the London Whale or something similar was in any way a hedge. This is complex stuff.
    3 Dec 2013, 06:06 PM Reply Like
  • User66224
    , contributor
    Comments (210) | Send Message
     
    This is going to sting a little bit but given the adaptability of the banks named, this inoculation will be effective for only a short while.
    3 Dec 2013, 04:08 PM Reply Like
  • Ron Reed
    , contributor
    Comments (346) | Send Message
     
    As someone once commented to me about banking/investing regulation (sic) "...son, those guys are a hell of a lot smarter than we are, we can make any rule we want and they will make money on it..."
    3 Dec 2013, 04:44 PM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (1695) | Send Message
     
    Why not just have a Sarbanes-Oxley sign-off attestation approach instead of having to comply with 17 different metrics designed (by Paul Volcker?) to detect prop trading. Please!

     

    This will raise regulatory compliance costs for sure.
    3 Dec 2013, 04:46 PM Reply Like
  • gwynfryn
    , contributor
    Comments (6458) | Send Message
     
    And look at the opportunities for future litigation; the legal profession is also too "big" to fail...
    4 Dec 2013, 07:11 AM Reply Like
  • Hello Again 83
    , contributor
    Comments (682) | Send Message
     
    Every rule the government puts in place never goes wrong. LOL
    4 Dec 2013, 01:19 AM Reply Like
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