Gary Gensler, the chairman of the Commodity Futures Trading Commission, said on Tuesday that regulators responsible for implementing the controversial Volcker Rule will have to reconcile differences in language.
“Where we can we will narrow differences,” Gensler said, referring to the varying definitions among regulators of permitted and prohibited activities under the rule, according to MNI News. “As long as Congress doesn’t use the term ‘joint rule,’ meaning, same exact words, there will probably be some differences.”
The Volcker Rule, which prohibits banks from engaging in proprietary trading, is one of the most contentious provisions of the 2010 Dodd-Frank Act. The rule does include an exception for market-making activities, though it is difficult for firms to qualify for the exception, Traders Magazine reports.
Several regulators, including the Securities and Exchange Commission, the Federal Reserve, the Federal Deposit Insurance Corp., the Comptroller of the Currency and the CFTC, have been working to synchronize their language differences. Congress, however, does not require identical wording between the agencies, so the possibility remains that regulators could publish differing versions of the rule, according to MNI News.
Gensler also spoke to coming changes in the swaps market regarding clearing requirements, saying that public input has been essential in crafting compliance rules, though registration requirements for large dealers are likely to remain in place.
“I do envision that if you do more than $8 billion in market making business with U.S. persons, and you did it in October, you should probably be prepared to register on January 1,” Gensler said, MNI News reports.
Gensler said further that it is time to “complete” the rule-makings under Dodd-Frank. He also said that, in regards to cross-border market transparency, nations have been coordinating rules, adding that capital rules will remain the same while margin rules will be “largely aligned.”
“There will be some differences,” Gensler said, according to MNI News. “If the transactions you enter into have a significant or direct effect on U.S. activities, they’re under Dodd-Frank.”
Critics of Dodd-Frank maintain that the law will negatively impact the U.S. economy and financial sector. Gensler said that the benefits to all outweigh the costs to the financial sector.