Tuesday, August 30, 2016

DODD-FRANK | Maloney Asks Five Agencies for Data

Rep. Carolyn B. Maloney (NY-12)
Yesterday Congresswoman Carolyn B. Maloney (NY-12) wrote to five U.S. financial regulators requesting trading data that the agencies have been collecting since July as part of implementing the Volcker Rule.

Rep. Maloney is the Ranking Member of the House Financial Services Subcommittee on Capital Markets and GSEs. The five regulatory agencies are the:
  • Federal Reserve System,
  • Federal Deposit Insurance Corporation,
  • Commodity Futures Trading Commission,
  • Office of the Comptroller of the Currency,
  • Securities and Exchange Commission.
The Volcker Rule, named after Paul A. Volcker, former Federal Chairman from 1979 to 1987, is formally §619 (12 U.S.C. §1851) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Rule is designed to identify and control the risk-taking of financial institutions. Information on trading information in needed to assist agencies in distinguishing between prohibited proprietary trading and legitimate market-making and hedging activities. This information is also valuable to anyone seeking to understand the exposure to risk of financial instruments and markets.

In her letter to the five regulators, Maloney notes:
[T]here has been a vigorous debate about the liquidity of certain U.S. fixed-income markets, such as corporate bonds, and about whether the liquidity of these markets has deteriorated in recent years. Data on the inventory turnover, inventory aging, and customer-facing trade ratios in the fixed-income market-making units of the large banks could prove particularly informative in this debate.
Compliance with Dodd-Frank has been slow. Some banks have been asking for extensions to 2022 to comply with some of the provisions of the law, and numerous proposals have been introduced to weaken the law.