US regulator, the Commodity Futures Trading Commission (CFTC), will next week propose its version of the so-called Volcker rule, which aims to ban prop trading by deposit-taking institutions in the US.
In its first open meeting of the year on 11 January, the CFTC will table the proposal it has been working on independently of other US financial regulators.
The proposition comes exactly three months after four other US watchdogs jointly proposed their own version of Volcker. On 11 October, the Federal Deposit Insurance Corporation, Federal Reserve, Office of the Comptroller of the Currency and the Securities and Exchange Commission issued their joint proposal for the rule. Late December, the deadline for public comment on the joint proposition was put back a month to 13 February after lawmakers pleaded for more time.
The Volcker rule, named after former Federal Reserve chairman Paul Volcker, is intended to restrict US banks’ proprietary trading activities and investments in private equity and hedge funds in order to reduce risk in the US banking system. The rule was introduced as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Other areas of contention among market participants include the rule’s definition of proprietary trading and its application to foreign entities.
At the meeting in Washington DC, the CFTC will also finalise a number of swap regulations under Dodd-Frank.
Three final rules to be considered are those pertaining to the registration of swap dealers and major swap participants, protection of cleared swaps customer contracts and collateral, and a rule concerning business conduct standards for swap dealers and major swap participants with counterparties.