Wednesday, March 26, 2014

Volcker Rule Effective Tuesday (April Fool's Day)

Destruction of the Temple of Jerusalem, by Francesco Hayez - Wikipedia

If you were wondering why the Big Banks were fighting so hard against The Volcker Rule over the past 5 years you are about to find out. As of Tuesday, April 1, 2014, the rule goes into effect. (No fooling.)

OCC: Volcker Rule: Final Regulations

Highlights The final regulations

• Prohibit banks from engaging in short-term proprietary trading of certain securities, derivatives commodity futures, and options on these instruments for their own accounts.
• Impose limits on banks’ investments in, and other relationships with, hedge funds and private equity funds.
• Provide exemptions for certain activities, including market making-related activities, underwriting, risk-mitigating hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds and private equity funds.
• Clarify that certain activities are not prohibited, including acting as agent, broker, or custodian.
• Scale compliance requirements based on the size of the bank and the scope of the activities. Larger banks are required to establish detailed compliance programs and their chief executive officers must attest to the OCC that the bank’s programs are reasonably designed to achieve compliance with the final regulations. Smaller banks engaged in modest activities are subject to a simplified compliance program.

*Note: The banks don’t have to be fully compliant until July 2015 so expect a wild shakeout between now and then as they try to rid themselves of TRILLIONS of DOLLARS worth of non-compliant derivatives. It won’t take that long as big banks have a tendency to EAT THEIR OWN when it comes to their own survival!

Note: 25, 26 July 2015 is the 9th of Av

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