WASHINGTON -- Federal regulators on Tuesday unveiled the final version of a rule designed to prevent federally insured banks from engaging in risky trading of stocks and securities, moving to put in place a key regulation called for in the 2010 financial regulatory overhaul.
The so-called Volcker Rule would stop banks from using their own money to trade for profit, or what's known as proprietary trading, and limits their ability to own or invest in hedge funds and private equity funds.
However, the final version of the rule, set to be approved Tuesday, would allow banks to continue making trades to offset specific risks in their investment portfolios. The rule also would allow banks to buy and sell securities for their clients, an important financial system practice called market-making.
Officials from five financial regulatory agencies have struggled to shape the final rule, which was supposed to be finished in mid-2012. Banks have lobbied hard to limit the rule's scope since regulators released proposed regulations in October 2011.
The agencies that drafted the rule are the
All those agencies were set to approve the rule on Tuesday after receiving about 18,000 public comments. The rule is about 70 pages long, preceded by a preamble of about 850 pages.
"Getting to this vote has taken longer than we would have liked, but five agencies have had to work together to grapple with a large number of difficult issues and respond to extensive public comments," Fed Chairman
Regulators tried to toughen the proposed rule so it would prevent a recurrence of