The proposal includes a series of exemptions for trades designed to hedge credit, interest rate or other specific risks. A bank could be free of the Volcker restrictions if it is hedging a specific position or a portfolio of risks across multiple trading desks.
Hedging trades would need to have a "reasonable," not a full, correlation with the underlying risk. Banks could also win exemptions if they are hedging a risk they are "highly likely" to face in the future.
Traders involved in the transactions would have to be paid from fees and the spread of their transactions rather than the appreciation or profit from their positions.
Foreign banks would be covered by the rule if they have U.S.-based staff involved in the restricted trades, according to the proposal.