Volcker Rule is another regulation aimed at restraining banks from engaging proprietary trading. This rule has various components to it. Some aspects deal with compliance program and rules, few other pertains to Quantitative metrics and reporting requirements. I have focused this article on few facts around how trading desks will conduct their quantitative metrics reporting and interpretation.
My observations:
1) Volcker Metrics requirements create huge reporting requirements for the banks at trading desk level
2) Fed examiners will have tough time to interpret some of these metrics as calculation methodologies are highly arcane.
3) Banks will have to build out the Volcker story to provide the details of why and how they can be exempted for market making activity.
4) I strongly think if transparency in reporting the trading activity happens then there will be no need for any kind restraints on market making activity.
5) FED should leverage the SDR data from depositories to analyze the banks. As it contains all the information pertaining to transactions
6) I definitely like the inventory metrics and they can help understand the desk trading whether it is customer facing or not
7) Volcker rule another requirement of RENTD ( Reasonably estimate near term demand). I think this one will be difficult to estimate.
Lastly, Volcker rule wants to restrain bank trading activity but, trading is like flow of water flow. If you put restraint in one direction then it water will find its next path of flow.
Below is the detailed version facts on Volcker rule.
My observations:
1) Volcker Metrics requirements create huge reporting requirements for the banks at trading desk level
2) Fed examiners will have tough time to interpret some of these metrics as calculation methodologies are highly arcane.
3) Banks will have to build out the Volcker story to provide the details of why and how they can be exempted for market making activity.
4) I strongly think if transparency in reporting the trading activity happens then there will be no need for any kind restraints on market making activity.
5) FED should leverage the SDR data from depositories to analyze the banks. As it contains all the information pertaining to transactions
6) I definitely like the inventory metrics and they can help understand the desk trading whether it is customer facing or not
7) Volcker rule another requirement of RENTD ( Reasonably estimate near term demand). I think this one will be difficult to estimate.
Lastly, Volcker rule wants to restrain bank trading activity but, trading is like flow of water flow. If you put restraint in one direction then it water will find its next path of flow.
Below is the detailed version facts on Volcker rule.
No comments:
Post a Comment