The Volcker Rule, as currently implemented, unnecessarily restricts banking and capital markets activities to the detriment of customer facilitation. Its current structure negatively impacts capital formation and economic growth and could exacerbate financial harm during times of stress.

While pure proprietary trading for one’s own account was historically a limited activity for most banks, the ability to trade and take positions in securities has been an essential tool to making markets and ensuring those markets remain liquid. SIFMA does not believe that proprietary trading caused the financial crisis or contributed to the failure of any banking organizations and that the best response to the Volcker Rule’s many problems would be to repeal the statute in favor of the traditional prudential regulatory framework applicable to banks. In addition, SIFMA believes that the Volcker Rule with its complex regulatory structure has caused diminished liquidity in a number of markets.

SIFMA welcomes the proposal by regulators to recalibrate the Volcker Rule’s implementing regulations, as it represents a growing recognition of the unintended negative impact caused by excessive complexity. While an important first step at simplification, SIFMA’s comments provide substantial recommendations addressing the proprietary trading, covered funds and compliance and metrics provisions of the proposal.