The biggest banks have already digested the myriad requirements of the complex 950-page Volcker Rule and have spun off prohibited proprietary trading units, but the industry is still pushing Congress to fully repeal the rule.

The Volcker Rule is supposed to limit risk-taking by banks by prohibiting proprietary trading, or trading for a bank’s own account, as a way to prevent a repeat of the 2008 financial crisis. Proprietary trading is defined by the Volcker Rule as “engaging as a principal to trade debt and equity securities, commodities, derivatives, or other financial instruments for the trading account of a banking organization or supervised nonbank financial company.”

A “trading account” is one used for acquiring or taking positions in proprietary trading for the purpose of selling in the near term or with the intent to resell, in order to profit from short-term price movements. Therefore, enforcement of the rule counts on being able to discern the “intent” of the trader. JP Morgan JPM, +1.17%   CEO Jamie Dimon has said that under the Volcker Rule, “you have to have a lawyer and a psychiatrist sitting next to you determining what was your intent every time you did something.”

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Very informative
05-03 04:23 by Liam
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