Maloney Releases New Data Showing Volcker Rule is Working

Mar 29, 2017
Press Release
This is the first hard data released publicly and it indicates that market-making activities are continuing even in times of stress, and banks are not engaged in a significant amount of proprietary trading

Washington, DC – Congresswoman Carolyn B. Maloney (NY-12), Ranking Member of the House Financial Services Subcommittee on Capital Markets, today released new information from the Federal Reserve that sheds light on the success of the Volcker Rule. This is the first hard data about the Volcker Rule to be released publicly and it shows that market-making activities continued even under times of stress and there was no evidence that banks are engaged in a significant amount proprietary trading. Rep. Maloney had asked U.S. financial regulators for an update on the ongoing implementation of the Volcker Rule last summer and released the new data during her opening statement at the Capital Markets Subcommittee hearing entitled “Examining the Impact of the Volcker Rule on the Markets, Businesses, Investors, and Job Creators.”

“I fully support the Volcker Rule because it stands for an important principle; that banks shouldn’t gamble with their customer’s money, especially when it’s insured by taxpayers,” said Rep. Maloney. “This is the first time we’ve been able to look at hard data about the Volcker Rule and it shows the rule is working. Bank trading desks are now making the vast majority of their money from legitimate market-making activities, and not from inappropriate proprietary trading. The data also show that the Volcker rule has not caused banks to pull back from market-making activities, even during periods of market stress. This is exactly what Congress intended.”

BACKGROUND

The Volcker Rule requires banks with significant trading operations to report daily quantitative trading data for each trading desk, in order to help the agencies distinguish between prohibited proprietary trading and legitimate market-making and hedging activities. The agencies have been collecting these data since July 2014, and therefore, had roughly two years of quantitative trading data when the Congresswoman sent her request in August 2016.

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