Banking Entity Trading Under The Volcker Rule

The Volcker Rule (section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), depending on how it is interpreted and enforced by regulators, has the potential to significantly change the scope and scale of trading within federally insured depositories and their affiliates. A number of well-written articles by various law firms summarize the basic definitions and legislative requirements of the Rule. This article goes further, describing the relevant background of the Volcker Rule trading restrictions and offering insight on potential implementation expectations.¹

Volcker Rule Background and Motivation

It has been said that there were no significant issues with respect to bank proprietary trading during the recent financial crisis, and therefore the Volcker Rule does not go toward solving any problems. However, looking back to the fall of 2007, it is historical fact based on SEC filings that significant financial company losses came from