Skold, Alida S. (2011): Intended and Unintended Results of the Proposed Volcker Rule.
This is the latest version of this item.
Download (576Kb) | Preview
Download (576Kb) | Preview
The intention of regulation is to protect the vulnerable. However, unintended results of regulation can cause the opposite occur. In its present form, the proposed Volcker Rule prohibits proprietary trading and has the potential of continuing the liquidity crisis that aided in the degradation of the housing market into decreased liquidity in the capital markets. The rule also prohibits the owning, sponsoring, or having certain relationships with hedge funds beyond three percent by the covered banking entities. Risk is transferring to less regulated financial institutions as new hedge funds are opened. The risk can have a profound impact on the retirement community through underfunded pension funds searching for absolute returns. Another unintended result of the proposed Volcker Rule is how banks conducting business in the United States or with United States “residents” will be at a competitive disadvantage due to lost revenues and the high cost of compliance. The rule has the potential to cause United States companies to be at a competitive disadvantage in global markets.
|Item Type:||MPRA Paper|
|Original Title:||Intended and Unintended Results of the Proposed Volcker Rule|
|Keywords:||Volcker Rule; Regulation; Prop Trading; Market Making; Hedge Fund; Risk; Banking Regulation|
|Subjects:||E - Macroeconomics and Monetary Economics > E0 - General > E02 - Institutions and the Macroeconomy
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General
G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
G - Financial Economics > G2 - Financial Institutions and Services
G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy-Making and Implementation
|Depositing User:||Alida S. Skold|
|Date Deposited:||16. Jan 2012 20:54|
|Last Modified:||18. Jun 2013 05:12|
Citations Analysis: Differences Between the Hedge Fund Manager and the Prop Trader. (2011, Feb 14). Infovest21; Wall Street Journal. Retrieved from http://professional.wsj.com/article/TPINFNSP0020110215e72e00002.html.
Board of Governors of the Federal Reserve System. (2011, October 11). PROHIBITIONS AND RESTRICTIONS ON PROPRIETARY TRADING AND CERTAIN INTERESTS IN, AND RELATIONSHIPS WITH, HEDGE FUNDS AND PRIVATE EQUITY FUNDS. Retrieved from http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20111011a1.pdf Press Release. Retrieved from http://federalreserve.gov/newsevents/press/bcreg/20111011a.htm.
Brush, S. (2011, Oct 27). Volcker Rule Will Cost Banks $1 Billion, U.S. Government Says. Bloomberg. Retrieved from http://www.bloomberg.com/news/2011-10-28/volcker-rule-to-cost-banks-1b-u- s-government.html.
Brush, S., Harper, C., Moore, M.J. (2011, Oct 31). MF Global’s Collapse Exposes Prop-Trading Risk that Volcker Wants to Curb. Bloomberg. Retrieved from http://www.bloomberg.com/news/2011- 10-31/mf-global-exposes-prop-trading-risk-that-volcker-wants-to-curb.html
Carney, J. (2011, Nov 2). “The Trade that Killed MF Global.” CNBC. Retrieved from http://www.cnbc.com/id/45132384.
Davis Polk & Wardwell Law Firm, LLP. (2011, Oct 12). Volcker Rule Proposed Regulations: Proprietary Trading. Retrieved from http://www.volckerrule.com/proprietary/prop.htm. Link: 2a. Market Making vs. Proprietary Trading.
Erman, M. (2011). MF Global collapse may cost Flowers $48 mln –source : Flowers $7 bln second fund hurt by weak finance sector. Reuters. Retrieved from http://uk.reuters.com/article/2011/11/01/mfglobal-flowers-idUKN1E79U0YP20111101
Farlex Dictionary. (2011, Nov 9). Market Maker. Retrieved from http://financial- dictionary.thefreedictionary.com/market+maker
FINRA. (2011, Nov 4). About the Financial Industry Regulatory Authority. Financial Industry Regulatory Authority. Retrieved from http://www.finra.org/AboutFINRA/.
Ismail, N. (2011, Sep 22). Millionaires Form Family Offices to Avoid Private Banks. Bloomberg. Retrieved from http://www.bloomberg.com/news/2011-09-21/millionaires-form-family-offices- to-dodge-private-bank-salesmen-in-asia.html.
Kantola Productions. (Producer). (2008). Leveraging the Spotlight of Leadership [DVD]. Available from www.kantola.com.
King, M.R., Maier, P. (2007). Hedge Funds and Financial Stability: The State of the Debate. Bank of Canada. Retrieved from http://www.bankofcanada.ca/wp-content/uploads/2010/01/dp07- 9.pdf
Landy, D. (2011, Oct 10). How the Volcker Rule May Affect Foreign Banks; DealBook. New York Times. Retrieved from http://professional.wsj.com/article/TPNYTB000020111010e7aa00462.html
Lucchetti, A., Patterson, S. (2011, Nov 11). Inside the Hunt for MF Global Cash. Wall Street Journal. Retrieved from http://professional.wsj.com/article/SB10001424052970203537304577030440112366870.html? mod=WSJ_hp_LEFTWhatsNewsCollection&_nocache=1321026742089&user=welcome&mg=id- wsj&mg=reno-secaucus-wsj
Major Trends Occurring in 2011 Implications for Hedge Funds/Funds of Funds. (2011). Infovest21 White Papers, 1-56. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=65156108&site=ehost-live.
Mehta, N. (2011, Oct 16). Constraints Seen for Market Makers Under Volcker Rule on Trading. Bloomberg. Retrieved from http://www.bloomberg.com/news/2011-10-17/constraints-seen- for-market-makers-under-volcker-rule-on-trading.html.
Osterland, A. (2011, Oct 17). Volcker rule could change bank profit dynamics; Retail-wealth businesses may face more pressure to hike contributions to bottom line. Wall Street Journal. Retrieved from http://professional.wsj.com/article/TPINVN000020111020e7ah0000q.html
Panchuk, K. (2011, Oct 10). Moody’s Sees Volcker Rule as Credit Negative for Big Banks. Housing Wire. Retrieved from http://www.housingwire.com/2011/10/10/moodys-sees-volcker-rule-as-credit- negative-for-big-banks .
Patterson, S., Zibel, A. (2011, Oct 12). Putting the Clamps on Banks. Wall Street Journal. Retrieved from http://professional.wsj.com/article/SB10001424052970203499704576624830073407522.html.
Regulators consider three-tier, red flag approach to determine compliance with Volcker Rule. (2011, Jan 10). Infovest21 LLC; Wall Street Journal. Retrieved from http://professional.wsj.com/article/TPINFNSP0020110111e71a00007.html.
Reuters. (2011, Nov 4). US regulators seek cover in MF Global blame game. The Malaysian Insider. Retrieved from http://www.themalaysianinsider.com/business/article/us-regulators-seek- cover-in-mf-global-blame-game/.
Ryan, T. (2011) Global Reform Industry Impact. SIFMA Annual Meeting 2011. Retrieved from http://www.sifma.org/uploadedfiles/news/speeches/2011/sifma-annual-timryan-speech.pdf
Touryalai, H. (2011, Oct 7). Volcker Rule Will Hit Goldman Sachs, Morgan Stanley Hardest. Forbes. Retrieved from http://www.forbes.com/sites/halahtouryalai/2011/10/07/volcker-rule-will-hit- goldman-sachs-morgan-stanley-hardest/.
Touryalai, H. (2011, Oct 12). Volcker Rule Is Out, How Much Will It Hurt? Forbes. Retrieved from http://www.forbes.com/sites/halahtouryalai/2011/10/12/volcker-rule-is-out-how-much-will-it- hurt/ .
Available Versions of this Item
Intended and Unintended Results of the Proposed Volcker Rule. (deposited 08. Jan 2012 05:39)
- Intended and Unintended Results of the Proposed Volcker Rule. (deposited 16. Jan 2012 20:54) [Currently Displayed]