WASHINGTON — The Securities and Exchange Commission unanimously issued a proposal Wednesday for implementing the so-called Volcker Rule.
The rule, mandated by the Dodd-Frank Act, will severely limit banks from proprietary trading and being affiliated with hedge funds and private-equity funds. The SEC is charged with enforcing the restrictions along with other agencies, many of which signed off on the proposal Tuesday.
Named for former Federal Reserve Board Chairman Paul Volcker, who first suggested the idea, the new rules will essentially ban banks from any meaningful proprietary trading. The law, however, allows exemptions for certain investments made on behalf of third-party customers, as well as market-making and hedging activities meant to lessen risk.
The proposal, which allows the public 90 days for submitting comments to the agencies, was issued separately Tuesday by the Federal Deposit Insurance Corp., the Federal Reserve Board and the Office of the Comptroller of the Currency.
