British Volcker rule rejected

In a statement released by the Parliamentary Commission on Banking Standards (PCBS) chairman Andrew Tyrie said:

The Banking Commission does not feel it appropriate to recommend the immediate prohibition of proprietary trading.

The PCBS prefers to pursue rules such as threatening banks with capital add-ons, however Tyrie added:

Were this approach to prove ineffective, further measures, including prohibition, could be desirable.

Incoming Bank of England governor Mark Carney has also made his opposition to a British Volcker rule to ban proprietary trading known. He has said that it is difficult to distinguish proprietary trading from market-making.

UK banks told the PCBS they do not engage in proprietary trading and said they do not want to, but Tyrie said that could change: "At a time when banks are under less intense scrutiny, proprietary trading could re-emerge as a greater risk."

He said proprietary trading was not a suitable activity for a bank, and could lead to conflicts of interest, have harmful cultural effects and raise pay expectations.