FINANCIAL TIMES: The senior Treasury official said that risk-taking such as the “London whale” derivatives trades, which saw JPMorgan Chase lose $6bn last year, would be banned.
But the official said some trading would fall between such activity and the explicitly permitted business of “market making” – buying and selling stocks and bonds on clients’ behalf. He said the rule itself would be quite short, leaving room for regulators’ discretion.
Banks have argued in presentations to the Treasury that the rule, named after former Federal Reserve chairman Paul Volcker, is already diminishing liquidity because banks are wary of holding large bond inventories for fear of being accused of buying to speculate. Less liquidity typically means higher costs for investors… (more)
