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Analysts see some relief in U.S. Volcker rule draft

Oct 07 2011 Reuters

WASHINGTON (Reuters) - U.S. banks have reason to think that regulators will put out a moderate proposal restricting proprietary trading, analysts said after a draft of the Volcker rule was leaked. Analysts said in research notes on Thursday that regulators appear to understand that if the rule is too restrictive, it could hurt market liquidity and place U.S. financial companies at a disadvantage. In particular, financial players are watching whether the rule still gives banks flexibility to hedge risk, and whether it has a broad enough exemption for market makers. "Early in the proposal, regulators suggest they understand the need to ensure banks remain in the market-making business and retain the ability to hedge their risks," said MF Global policy analyst Jaret Seiberg in a note. A roughly 200-page draft proposal of the Volcker rule was posted online by the American Banker publication late on Wednesday. The staff draft could change before the Federal

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