Trump victory brings Dodd-Frank under the chop

The victory of Donald Trump in the US election could mean a scale-back in post-financial crisis reforms.

The surprise victory of Donald Trump has brought the US Dodd-Frank Act into question, as well as other stricter banking regulations. 

Among his other election promises, Trump had campaigned on loosening Wall Street regulations, including capital requirements, the Dodd-Frank Act and the Volcker Rule. 

With his election victory, it potentially brings these key post-financial crisis reforms to the chopping board, and calls in to question whether he will diverge the US away from the G20 post-crisis agenda.

“Although he pursues the elimination of all existing regulation, it is obvious that it is an extremely complex task, considering the need for the views of both the House of Representatives and the Senate to align,” says Virginie O’Shea, research director, institutional securities & investments, Aite Group. 

“He might, however, loosen certain regulations in the longer term, such as capital requirements for financial institutions, or maybe eliminate a few specific lines from Dodd-Frank.”

As well as Trump the Republican party, which controls both the Senate and House, has proposed paring back post-crisis reforms.

Since its passing, Dodd-Frank has brought about a number of radical changes including a trade obligation for OTC derivatives, trade reporting, and mandatory central clearing. 

Following the result of the election, markets across the US, Europe and Asia have seen significant volatility. CBOE’s volatility index (VIX) futures, often known as the fear gauge, saw over a quarter of a million trades take place during non-US trading hours, 20,000 contracts more than the post-Brexit fallout.