The future of the Volcker Rule: a poll by IFLR and Morrison & Foerster

Author: Amélie Labbé | Published: 1 May 2018
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Is the Volcker Rule a necessary safeguard or an unnecessary burden? This is an important question that has underpinned many discussions in the financial services sector in recent months, especially as the US regulatory rollback gathers steam.LOGO

US Federal Reserve vice chairman for supervision Randal Quarles has publicly stated the Rule needs to be clarified and made to be more transparent vis-à-vis what exactly is subject to it, and what in turn is not.

The Rule was introduced as part of the Dodd-Frank Act in 2010 to prevent systemic risk in the economy. It bans banks from carrying out speculative trading activities including investment banking and proprietary trading, and  applies to all banks regardless of size, assets held or even market share.

Unsurprisingly, it has been at the centre of much debate since it was originally enacted, with recent calls to reduce its scope of application including for smaller, non-systemic banks. The House passed a bill to this effect on April 25, which would leave around 10 US banks under the Rule’s remit if approved.

William Galvin, chief securities regulator for the Commonwealth of Massachusetts, has warned that weakening the Rule could lead the sector on a dangerous path reminiscent of the 2008 financial crisis. "These changes may increase profitability for some firms and banks in the short term, but they will increase risks for the economy and for investors, savers, and taxpayers," he told IFLR.

With this mind, IFLR and Morrison & Foerster have are running a quick poll to find out views on the future of the Rule.

Click to take the confidential survey or contact if you would rather give your responses using a different method.