Wall Street shrugs off Volcker Rule 3.0

10 May 2010 By Antony Currie Follow @AntonyMCurrie

The latest plan to ban banks from prop trading also aims to curtail their betting against clients. But Senators Levin and Merkley s heavyhanded amendment still lacks detail. Investors are wagering either that it won t pass or that the SEC will take the sting out of the tail.

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U.S. Senators Carl Levin and Jeff Merkley have issued an amendment to the Wall Street reform bill. Part of the amendment, like the socalled Volcker Rule, seeks to bar banks from proprietary trading and owning hedge and private equity funds. It also seeks to impose greater capital requirements on nonbanks that continue to engage in such practices.

The other part of the amendment seeks to end any activities which: give rise to a material conflict of interest between the bank or nonbank and its client; leave institutions overly exposed to risky assets; pose a threat to the safety and soundness of the bank or nonbank; or pose a threat to the financial stability of the United States.

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