According to CNBC, the Federal Reserve may delay the Volcker rule’s start date, giving banks more time to comply. The news should come as a relief to the banks, who, thanks to set backs while writing the rule, would have less than a year to comply by the current date of July 2014.
The Volcker rule, which restricts banks from proprietary trading that would put their own capital at risk, can be delayed by the Fed in one year increments, giving banks until July 2015 to comply. An announcement on whether or not the Fed will actually move the date should come by next month.
It should be noted that the delay to the Volcker rule would not be a complete halt, as it would come with conditions. Pure proprietary trading desks would have to be eliminated by July 2014, and banks would have to take certain steps towards compliance like data collection and disclosure before the 2015 date.
The Volcker rule is considered one of the harsher regulation rules being pushed through since the passing of the Dodd-Frank Act. Banning both proprietary trading and the maintaining of equity in “covered funds,” the rule is supposed to limit risk and market manipulation. Though banks are worried that the rule may make legitimate trading like hedging more difficult, as the difference between hedging and proprietary trading is very subtle.