2018.05.3021:40:00UTC+00Fed Unveils First Easing of ‘Volcker Rule’ Limits

U.S. regulators have started a major easing of the Volcker Rule ban on bank risk-taking, proposing to simplify the rule introduced after the 2007-2009 financial crisis.

The rewriting of the Volcker rule marked another move by U.S. regulators under the Trump administration to loosen rules introduced by the 2010 Dodd-Frank financial reform law in a move to boost lending and economic growth.

Headed by the Federal Reserve, regulators on Wednesday revealed a series of changes that will pacify persistent grievances of banks over speculative trading. Lenders have long complained that the rule made to ban lenders that accept U.S. taxpayer-insured deposits from engaging in proprietary trading is too unclear and complex. The rewrite is looking to make things unambiguous which trades qualify for safe harbors and to expand the exemptions.

The rewrite also eases one of the more contentious terms of the rule which only allows trades associated to market-making and underwriting by making it easier for companies to show such trades achieved near-term demand from clients.

Another key change would scrap a presumption that trading positions held for fewer than 60 days are proprietary unless a bank can prove otherwise.

The current chairman of the Fed who was appointed by President Donald Trump, Jay Powell, said regulators were seeking to “replace overly complex and inefficient requirements with a more streamlined set of requirements”.