How the Volcker Rule could have succeeded

Author: Edward Price | Published: 28 Mar 2016

One year after its implementation, US counsel are assessing the Volcker Rule. The message is clear: they wish it had been crafted with better definitions, fewer authors, and a better sense of the potential impact on securitisation, market liquidity and shadow banks. 

Since implementation in 2015, Section 619, or the Volcker Rule, has caused complaints from counsel and industry. So one year on, IFLR asked how exactly practitioners feel the rule could have been written differently.

Cover funds

Definitions was top of market participants' concerns. The Volcker Rule has two core aims. One, banning insured depository institutions and their affiliates from proprietary trading. Two, limiting such entities’ investment in private equity funds, hedge funds or covered funds. As the rule was written, however, it became apparent there was a complication: defining covered funds.

"The Volcker Rule's authors couldn’t figure out how to define the types of funds they were...