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A sign of Goldman Sachs is seen at the company's post on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
The Federal Deposit Insurance Corp. voted Tuesday in favor of five agencies' review of the post-crisis regulation known as the Volcker Rule.
This approval clarifies the way banks negotiate securities with their own funds, a ban that has been a key element of the legislation since the crackdown on banks after the financial crisis.
The proposed deletion concerned a key issue that concerned the definition of "proprietary trading", a transaction carried out by a company designed to generate a direct gain in the marketplace rather than investing on behalf of its customers. Regulators hope to clarify the definition of proprietary trading and change the ban that prohibits banks from making short-term investments with their own capital.
Other institutions, including the Federal Reserve and the Securities and Exchange Commission, still have to take into account the proposed overhaul.
"One of the most difficult post-crisis reforms to implement for regulators and the industry is the Volcker rule, which prevents banks from engaging in proprietary trading activities. and to hold hedge funds and private equity funds, "said Jelena McWilliams, Chairman of the Board. FDIC.
"In fact, the rule proved so complex that it required 21 sets of frequently asked questions, or FAQs, issued by regulators within three years of its adoption," she added.
Specifically, the final rule will remove an "accounting element" used to determine the types of prohibited transactions. Instead, regulators will turn to models that are easier to digest in the original Volcker rule. Although the scale of prohibited transactions is not expected to change significantly, banks will be better informed about their ability to create markets for customers.
The Volcker rule had originally been proposed by regulation and promulgated under the Dodd-Frank Wall Street Reform and Protection Act and prevented banks from investing their own money in private equity funds. hedge and private equity funds.
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