Ring fencing Volcker’s Rule? : The Liikanen Report and justifications for ring fencing and separate legal entities revisited

Marianne, Ojo (2016): Ring fencing Volcker’s Rule? : The Liikanen Report and justifications for ring fencing and separate legal entities revisited.

Abstract

The predecessor paper to this publication, “Volcker/Vickers Hybrid”: The Liikanen Report and Justifications For Ring Fencing and Separate Legal Entities, considered the merits, objectives and cost-benefit attributes of respective models associated with the Vickers Report, Liikanen Report and Volckers Rule – by way of reference to the degree of separation of legal entities or banking activities involved, as well as whether an outright ban or prohibition on proprietary trading is involved.

This paper is aimed at highlighting why ring fencing not only presents a more feasible and cost effective option to other models, but also why its degree of flexibility provides the more appropriate balance in a financial environment whose trend is increasingly inclined towards conglomeration.

• Item Type: MPRA Paper
• Language: English
• Keywords: Vickers Report; Volcker’s Rule; Liikanen Report; ring fencing; cross-sector services’ risks; liquidity risks; systemic risks; capital requirements; leverage ratios
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; K - Law and Economics > K2 - Regulation and Business Law

References

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IFLR, Banking Sector Reforms, < http://www.iflr.com/Article/3107360/Banking-sector-reform-a-definitive-guide-to-the-latest developments.html?LS=EMS763204 >

IFLR, Why Kay, Volcker Are Wrong About Ring Fencing <http://www.iflr.com/Article/3113446/Banking/Why-Kay-Volcker-are-wrong-aboutringfencing. html>

Sheel A and Ganguly M “Ring Fencing Wall Street” http://www.indianexpress.com/news/ringfencing-wall-street/1210651/0

Varriale G, „Liikanen Poll: Volcker/Vickers Hybrid Wrong For Europe's Banks, 18 September 2012

Varriale G, „FSA Prudential Chief: Why Banks Must Be Ring Fenced“ http://www.iflr.com/Article/3114533/EU/FSA-prudential-chief-why-banks-must-beringfenced.html

Vickers Report, The Independent Commission on Banking (ICB), Final Report, Recommendations, September 2011

The Final Report of „The High-Level Expert Group on Reforming the Structure of the EU Banking Sector“ The Liikanen Report (Final Report, 2nd October 2012) The „Volcker Rule“ , Section 619 of Title VI of the Dodd Frank Act