Officials say Volcker Rule could be ready by fall

Daniel Tarullo

The controversial Volcker Rule, a Dodd-Frank provision that prohibits banks from engaging in proprietary trading, may reach completion by September.

Though regulators have not set a definite date of completion, regulators have been making significant headway on the proposal, and some officials say that it could be completed as early as this summer. Fed Governor Daniel Tarullo announced earlier this year that it was a “real possibility” that regulators would be unable to meet the Volcker Rule’s July 21 deadline, DealBook reports.

Critics of the Volcker Rule say that it is overly complex and would reduce market liquidity. Foreign regulators in Mexico, Canada and Japan have echoed those concerns, while some opponents have called for a re-proposal of the rule.

“[Re-proposal] is necessary for several reasons,” the Securities Industry and Financial Markets Association said in an April letter to regulators, according to DealBook. “First, the changes to the proposal needed to correctly implement the Volcker Rule mandate and to avoid serious harm to our financial markets are so extensive that [re-proposal] will be required as a matter of administrative law.”

Rule-writers, however, have not discussed any possibility of re-proposing the draft and at present have no plans to re-propose a new draft of the provision.

An early version of the rule sought to make a distinction between market-making activity, which is exempt under the Dodd-Frank Act, and proprietary trading. Regulators, however, have been unable to come to agreement regarding the final definition for market-making, DealBook reports.

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