The Volcker Rule: Considerations for implementation of proprietary trading regulations

Financial Services

Strategy

The Volcker Rule: Considerations for implementation of proprietary trading regulations

An Oliver Wyman study commissioned by the Securities Industry and Financial Markets Association (SIFMA)

January 2011

Implementing the Volcker Rule restrictions on proprietary trading will be one of the most important, and most challenging, rulemaking responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The Volcker Rule distinguishes between prohibited trading and permitted activities - specifically market making, securitization, hedging and underwriting related activities. These activities allow for the effective functioning of US markets and ongoing access to capital, the engine of economic growth. As a result, regulators must be able to meaningfully and effectively distinguish between prohibited proprietary trading and activities permitted under the Volcker Rule, which can vary substantially across asset classes, market practices, and market conditions.  

SIFMA has commissioned the following Oliver Wyman study, which describes how such permitted activities provide essential liquidity in a representative set of asset classes and markets and illustrates why implementation of the Volcker Rule must be firmly grounded in market realities.

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SIFMA brings together the shared interests of hundreds of securities firms, banks and asset managers. SIFMA's mission is to support a strong financial industry, investor opportunity, capital formation, job creation and economic growth, while building trust and confidence in the financial markets. SIFMA, with offices in New York and Washington, D.C., is the US regional member of the Global Financial Markets Association. For more information, visit http://www.sifma.org/.

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