The Volcker Rule negatively impacts market liquidity and capital formation; has overbroad and burdensome provisions that impinge on traditional banking and asset management activities; is too complex; and is duplicative.

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.

If the statute is not repealed, the implementing regulations should at the very least be modified  to address concerns of vagueness, breadth and complexity. For instance, the definition of proprietary trading should focus on short-term trading and eliminate the intent-based test currently in the rule.  Also, one of the multiple agencies currently responsible for the Volcker Rule should be designated as responsible for implementing, interpreting and enforcing the Rule as this will lead to consistency in approach.