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CFTC approves Volcker rule

Scott O'MaliaThe U.S. Commodity Futures Trading Commission approved the Dodd-Frank Act's Volcker rule on Wednesday, which would limit banks' proprietary trading and hedge fund investments.
 
The CFTC voted 3-2 to propose the ban, which opens the measure to 60 days of public comment. The rule was named for Paul Volcker, the former federal reserve chairman, and was included in the Dodd-Frank Act to rein in trading alleged risky bank trading that benefited from both federal discount window borrowing privileges and federal deposit insurance, Bloomberg reports.
 
The proposed rule would stop banks from making trades for their own accounts while allowing them to continue short-term trades for market-making or hedging. The banks would also be limited from investing in hedge funds and private equity. The rule would go into effect on July 21.
 
"In their current forms, both the joint proposal and the proposal before the commission today in their complexity fall short of providing an appropriate foundation for a rigorous and reliable rulemaking process, and it seems inevitable that we and our fellow regulators will have to engage in re-proposals," Scott O'Malia, one of the Republican commissioners who voted against the proposal, said, according to the ABA.
 
The CFTC also approved three final swaps rules, including registration of swap dealers and major swap participants, business conduct standards for swap dealers and major swap participants, and protection of cleared swaps customer contracts and collateral.
 

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