Wall Street banks, which already shut proprietary trading units that helped fuel record profits, are girding to learn next week how much revenue the Volcker rule may cut from the $44 billion they say comes from market-making.
With U.S. regulators scheduled to vote Dec. 10, the largest firms are getting little detail about the final terms of the Volcker rule’s ban on proprietary trades, and still have basic questions about what kind of market-making will be allowed, said three senior U.S. bankers. They’re also wondering whether they’ll have to change practices or curtail business in some less-liquid markets, the bankers said.
Traders work on the floor of the New York Stock Exchange in New York. Photographer: Michael Nagle/Bloomberg
The answers could threaten their revenue and affect transaction costs for clients of firms such as JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. The Volcker rule is close to being adopted more than three years after it became a centerpiece of the 2010 Dodd-Frank Act, designed to prevent a repeat of the global credit crisis.
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