While the revisions won’t narrow the rule’s scope and won’t cause a seismic shift in banks’ trading, giving firms clarity about what they can stockpile for customers can alleviate concerns about potential violations. The most dramatic effect of the overhaul is likely to be a reduction of expensive compliance headaches.
The Fed, FDIC, OCC and CFTC declined to comment on Volcker Rule progress. The SEC didn’t respond to a request for comment.
Randal Quarles, the Fed’s vice chairman for supervision, said last month that the next step would include the changes to the proprietary-trading definition and the addition of proposals on the funds side of the rule. He didn’t get into specifics on whether the agencies would finalize the new trading definition. According to federal regulatory practice, a re-proposal is typically required if dramatic changes are made to an earlier proposal.
‘New Proposal’
“Regulators cannot simply rewrite the scope of the Volcker Rule and the kinds of trades it covers without giving the public the chance to comment on the details of those changes,” said Marcus Stanley, policy director of the consumer advocacy group Americans for Financial Reform. “If they are going to throw out the approach they proposed in 2018, they need to do a new proposal.”
Though the regulators moved in a relatively rapid fashion to propose the overhaul of Volcker last year, the industry greeted the effort with jeers and lobbied against it. The process got bogged down as multiple agencies worked to address those concerns, but there are reasons to try to finish in the coming months. At this stage in President Donald Trump’s administration, there’s some possibility that rules that aren’t completed by the first few months of 2020 could face congressional removal if Democrats win the White House and Senate in next year’s elections.
This story provided by Bloomberg News.