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The Volcker Rule And Evolving Financial Markets, Charles K. Whitehead
The Volcker Rule And Evolving Financial Markets, Charles K. Whitehead
Cornell Law Faculty Publications
The Volcker Rule prohibits proprietary trading by banking entities - in effect, reintroducing to the financial markets a substantial portion of the Glass-Steagall Act’s static divide between banks and securities firms. This Article argues that the Glass-Steagall model is a fixture of the past - a financial Maginot Line within an evolving financial system. To be effective, new financial regulation must reflect new relationships in the marketplace. For the Volcker Rule, those relationships include a growing reliance by banks on new market participants to conduct traditional banking functions.
Proprietary trading has moved to less-regulated businesses, in many cases, to hedge …