US investment banks 'looking to avoid Volcker Rule'

4 April 2012

Many investment banks in the US are hoping to prevent new regulations from impacting on their business by switching some members of staff around internally.

The Volcker Rule - which was formed as part of the Dodd-Frank financial oversight law and is scheduled to come into effect in July - has been specifically designed to prevent a repeat of the 2008 taxpayer bailouts.

This means financiers will be required to stop any proprietary trading in order to limit their risk-taking activities.

However, companies will still be able to manage these hedge fund strategies if they use capital from a third party to do so over the next two years - and the likes of UBS, Citi and JP Morgan are reportedly considering doing so.

Donald Lamson, lawyer at Shearman and Sterling, told Reuters this is a "logical" step, as "if you have people who have certain trading skill sets to keep them active you can have them face clients and sell those strategies".

By Tony Aynsley

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