Foreign opposition to proposed Volcker rule growing

On January 11 and several months after other regulators took similar action, the Commodities Futures Trading Commission (CFTC) finally approved its Volcker rule proposal. Named after former Federal Reserve Chairman Paul Volcker, the rule is designed to constrain risky trading at banks that receive federal deposit insurance and Fed borrowing privileges.

As has been the case with several components of the Dodd-Frank financial reform bill, the Volcker rule has elicited strong opinions from various sides. In recent weeks, Japan is the latest nation to weigh in with its criticism of the proposed rule.

On December 28, Japan sent a letter to several regulatory agencies, including the Federal Reserve, claiming the rule could have “an adverse impact” on the trading of Japanese government bonds, reports the Wall Street Journal.

Regulators will have an opportuntity to discuss further the logic behind their proposals at a House committee hearing to examine the rules’ impact on markets on January 18.



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