SEC’s Paredes calls for regulators to re-propose Volcker Rule

Troy Paredes

Securities and Exchange Commission member Troy Paredes called on U.S. regulatory agencies to re-propose the Volcker Rule, warning that the rule may have a potentially harmful impact.

“At this point, the most prudent path forward would be a re-proposal,” Paredes said at a Washington conference, according to Bloomberg. “We run the risk that when we solve one problem we create many other problems and other unintended consequences.”

In October regulators released the nearly 300 page Volcker Rule, a provision of the 2010 Dodd-Frank Act that is intended to prohibit proprietary trading. The proposal extends exemptions that ultimately permit any proprietary trading related to hedging risk or market-making activities.

The Volcker Rule, however, has been the subject of much criticism and debate, particularly regarding how the measure will affect domestic and overseas markets. Many critics argue that the rule is overly complex and comprehensive.

Former Federal Deposit Insurance Corp. Chairman Sheila Bair suggested that lawmakers should re-propose the rule, as it is too complex in its current form. Representative Barney Frank (D-Mass.) said last month that regulators should present a simplified Volcker Rule by Sept. 3, Bloomberg reports.

The Volcker Rule is set to take effect July 21, but Federal Reserve Chairman Ben Bernanke told Congress that regulators were not likely to have the rule finished by that date. In March, a bipartisan group of senators introduced a resolution that would shift the deadline to a date that regulators could more successfully meet.

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