Following more forward signaling than we can remember for most consequential rulemakings, the FRB today unanimously began the five-agency process of revising Dodd-Frank’s Volcker rule (see FSM Report PROPTRADE6). As anticipated, the proposal does not implement new statutory small-bank relief (see Client Report SIFI25), but addresses some of the most problematic aspects of the rule for banking organizations with small trading books, defined as those with less than $1 billion in trading assets and liabilities. These companies would come under a rebuttable compliance presumption. “Moderate” and “significant” trading organizations – about forty firms or 98 percent of industry trading – would come under tailored standards scaled up to apply most stringently to the largest companies. However, some of these standards are also eased, most notably those pertaining to the sixty-day rebuttable presumption.
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