US regulator in favour of Volcker rule

US REGULATORS came a step closer to implementing the Dodd-Frank rules on banking yesterday, after laying out a fresh draft of the Volcker rule and giving more protection to collateral in swaps deals.

The Volcker rule, under the Dodd-Frank Act, prevents banks that hold customer deposits from proprietary trading, on the basis that it could unfairly risk retail customers’ cash.

The US Commodity Futures Trading Commission (CFTC) said it would prevent banks that enjoy federal deposit insurance and the right to borrow from the Fed discount window from engaging in prop trading and restrict investments in hedge funds and private equity.

Rules on collateral have been brought into sharp focus by the collapse of MF Global. The Volcker rule will come into effect on 21 July.