Federal Reserve governors will vote next week on proposing changes to the Volcker Rule, the central bank announced Wednesday.
A formal proposal would be the first step in the Trump administration’s reworking of the rule to ease burdens on banks. The rule, a centerpiece of the 2010 Dodd-Frank reform, prohibits banks from speculative trades.
Four other agencies would have to join in the rewrite, making it a painstaking process.
Regulators are expected to revisit the rules to make it easier for banks to take positions for short periods of time and to generally lessen the reporting requirements involved in the rule.
The Volcker Rule is meant to stop banks from engaging in speculative trading with deposits that are insured by the federal government. It includes exceptions for investment banks that engage in trading on behalf of their customers, for instance by allowing them to hedge against risks or by creating markets for them.
Distinguishing between purely speculative trades and trades carried out on behalf of customers is tricky. Accordingly, the rule is complicated.
Just this week, Congress passed legislation that significantly pared back the rule by exempting all but big banks from it.
