As IFLR predicted, the Volcker rule’s proposed text and preamble has created more questions than answers.
The 298-page proposals released last week by four regulators poses 383 questions – more than most senior practitioners have seen in any rule during their career.
The industry is still formulating its response and views, but many have distanced themselves from general propositions in media reports claiming the rule is more moderate than expected, and conversely, that the market making exemption is narrower than expected. This latter claim has not been supported by examples.
The consensus is that the long list of question signals disagreement between the five regulators drafting the rule, and that this is not unexpected given the statute’s application to the real world is considered by some to be near-impossible.
But their effort to engage the market is commendable. “What I think the regulators are saying is ‘look, we’ve batted...