In a five page briefing, the body outlined proposals to prevent commercial bank-owning firms and institutions from proprietary trading.
In a summery, the US government stated: âThese firms will be under tough, consolidated supervision, more stringent capital and liquidity requirements, and be required to provide more information to the market about their risks.
âMoreover, any financial firm that is identified for heightened supervision under the administration's regulatory reform proposal would be subject to additional capital and quantitative limits on these activities.â
Mergers which provide a bank with more than ten per cent of a market share in a company will also be discouraged while banks will be prevented from sponsoring or investing in hedge funds.
The new proposals, known as the Volcker Rule after former Federal Reserve chairman Paul Volcker, are part of a bid to prevent the US economy from facing another financial crisis in the future.
By Jim Ottewill