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Volcker Rule Changes Move Forward After SEC Votes on Overhaul - ABI

The Securities and Exchange Commission voted 3-to-2 yesterday to seek public comment on the Volcker revamp, the last of five agencies that needed to sign off on the proposal, Bloomberg News reported. After reviewing feedback from financial firms, lawmakers and Wall Street critics, regulators will likely hold a second round of votes on whether to make the changes final. The plan for revising Volcker, which was named for former Federal Reserve Chairman Paul Volcker, is a significant win for banks that have long argued the original rule was overly complex and costly to comply with. The Federal Reserve became the first agency to move the proposal forward last week, followed by the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Commodity Futures Trading Commission and now the SEC. The proposal maintains Volcker’s ban on proprietary trading, in which banks invest for their own profits rather than on behalf of customers. But it would remove an important assumption that positions held by lenders for fewer than 60 days are proprietary and make it easier for banks to determine whether trades are prohibited. Regulators also want to give firms more leeway to take advantage of exemptions in Volcker that permit trades that hedge market risk and are done for market-making purposes.

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