Sooner or later

Author: | Published: 26 Jan 2018

Banks have not been able to engage in proprietary trading since the financial crisis. But reform could be on the cards, says Tom Quaadman, executive vice president of the US Chamber of Commerce’s Center for Capital Markets Competitiveness

Proprietary trading occurs when a financial firm buys and sells stocks, bonds or other financial instruments, on their own trading account, with the purpose of profiting from market movements. Following the 2008 financial crisis, some, including former Federal Reserve chairman Paul Volcker, believed that proprietary trading by banks might adversely implicate federally insured deposits. On January 21 2010, President Barack Obama proposed a ban on proprietary trading and named it the Volcker Rule. The Obama administration took this action despite scepticism domestically and internationally. Furthermore, experts and regulators acknowledged that proprietary trading was not a cause of the financial crisis. The goal of the Volcker Rule was to de-risk the financial...