The restrictions may limit banks' trading profits -- once a prime source of Wall Street revenue. JPMorgan, Goldman Sachs and Morgan Stanley are among banks that have shuttered or made plans to spin off proprietary trading groups in anticipation of the rule. Citigroup is following suit, closing its Equity Principal Strategies business, according to a memo by Derek Bandeen, the bank's head of equities, that was obtained by Bloomberg News.

The proposal released in October by the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Securities and Exchange Commission drew more than 14,000 comments, ranging from a two-page letter of opposition by Michel Barnier, the European Union's financial services commissioner, to five letters of protest from the Securities Industry and Financial Markets Association totaling 379 pages.

'Such An Avalanche'

"I've never seen such an avalanche," said Douglas Landy, a banking partner at law firm Allen & Overy LLP in New York who has been following regulation for 18 years. The Volcker rule has become "the defining fight of this generation" in financial rulemaking, said Landy, whose firm represents Canadian and other foreign banks opposed to the rule.

Officials from Canada, Japan, the U.K. and the European Banking Federation sent letters to the U.S. Treasury Department and other regulators saying the measure would harm global liquidity and international cooperation. G-20 leaders haven't endorsed the rule, which exempts U.S. government debt but not non-U.S. government bonds.

'Limit The Scope'

Regulators should "limit the scope of the rule only to the territory of the United States," Barnier wrote. "The current exemption for non-U.S. banks as well as for activities outside of the U.S. would appear very restrictive."

Stuart Alderoty, senior executive vice president and general counsel for HSBC's North America Holdings unit, complained that the proposed rule "would apply not only to transactions with a U.S. counterparty, but also to transactions that have limited connections to the United States."

"As currently drafted," Alderoty said, "the proposed rule would limit the ability of our Hong Kong affiliate, which is independently capitalized, to purchase for its own account securities traded on a U.S. exchange, or trade for its own account utilizing a U.S. agent to effect a transaction."

Michael Williams, managing director of Credit Suisse Securities LLC, said the rule could hurt the U.S. economy.

'Job Losses'