U.S. regulators on Wednesday proposed simplifying a rule introduced after the 2007-2009 financial crisis that bans banks from trading on their own account in order to make compliance easier for many firms.
The rewrite of the so-called Volcker Rule marked another step by regulators under U.S. President Donald Trump to ease rules introduced by the 2010 Dodd-Frank financial reform law in a bid to boost lending and economic growth.
Banks have long complained the rule meant to ban lenders that accept U.S. taxpayer-insured deposits from engaging in proprietary trading is too vague and complex. The rewrite seeks to make clear which trades qualify for safe harbors, such as when banks facilitate client trades and hedge risks, and to expand those exemptions.
The proposal eases one of the more controversial aspects of the rule which only permits trades related to market-making and underwriting by making it easier for firms to show such trades met near-term demand from clients.