Global Financial Strategy

Search the site   >>Advanced search
First for financial regulatory news and views
HOME   |   REGISTER   |   SUBSCRIBE   |   NEWS   |   ANALYSIS   |   INTERVIEWS & FEATURES   |   EVENTS   |   MUTTERS   |   JOBS   |   MY ACCOUNT
EUROPE   |    US & CANADA   |    ASIA PACIFIC   |    MIDDLE EAST & AFRICA   |    LATIN AMERICA & CARIBBEAN   |    OFFSHORE   |    SINGAPORE   |    HONG KONG
TRADING   |    CASINO MARKET   |    BANKING   |    INSURANCE   |    FINANCIAL REPORTING   |    TAXATION   |    MACROECONOMIC   |    PROFILES   |   CONTACT   |   
  • MF Global spoke of 'strong' finances
  • EC: No corp gov powers for ESAs
  • FSA appoints senior investment bank adviser
  • GFS has now closed
  • Czechs join UK on fiscal compact sidelines
  • Davos stalemate on EU's IMF funds
  • Tucker: Resolution regime 'top priority'
  • Saudi Arabia increases central bank role
  • FSB urges Canada for one securities regulator
  • CFTC set for committee to scrutinise HFT
  • Fitch downgrades Belgian banks
  • What corruption really costs
  • UK FSA pushes for Mifid II rethink on OTCs
  • Shanghai boosts global financial status
  • Canada aligns credit rating rules with EU
  • Bowles blasts lack of women at ECB
  • Sarkozy to introduce French FTT in August
  • Barnier warns on further bonus reforms
GFS LinkedIn
GFS Facebook
GFS Twitter
GFS RSS feed
You must be logged in to use this function.


EU launches backlash on Volcker rule

Friday 27 January 2012 – by Karina Whalley


The European Commission has threatened to replicate extraterritorial measures in Europe if US does not drop similar proposals being brought in under the Volcker rule.

In an interview with the Wall Street Journal on Friday, Michel Barnier, EU commissioner for the internal market, said he will contest the proposal with US Treasury Secretary Timothy Geithner in a meeting next month.

“I will talk to Mr Geithner next month. … We can’t accept extraterritorial consequences or Europe will be tempted to do the same thing,” Barnier told the WSJ.

The EU is concerned the proposal will hinder US banks’ ability to trade European sovereign bonds which could reduce liquidity in the markets and drive up funding costs for EU member states. Japan and Canada have also expressed concerns over the rule’s potential negative impact.

The controversial legislation, named after former Federal Reserve Chairman Paul Volcker, aims to prevent swap dealers and other bank entities from engaging in proprietary trading and from investing in certain hedge funds or private equity funds.

The Volcker rule applies to any banking institution, wherever situated, that has a US branch, agency or bank subsidiary, as well as to the institution’s other subsidiaries and affiliates around the globe.

Related articles:
Fed ‘open to’ Volcker rule alternatives
Japan regulators slam US Volcker rule
Volcker rule gets final clearance
CFTC set for Volcker rule vote
Ex-regulator urges Volcker rule rethink
Barnier panel to look at Vickers for EU
Overseas banks may face Volcker Rule
Volcker tackles long-term bank investments
Banks have 2 years to enact Volcker

Like the EU, Japan is adamant that the extraterritorial clause is removed from the legislation and has raised concerns over the rule’s adverse impact on the Japanese government bonds market due to increased operational and transactional costs of trading the bonds.

The country’s central bank and the financial regulator warned that Japanese banks could be forced to dramatically reduce or even cease their US operations which would badly hit liquidity and pricing of the Japanese bonds.

The Canadian financial services watchdog wrote a letter to US authorities in December warning that the draft rules will significantly limit Canadian banks’ ability to manage their risks and liquidity.

Within the US, the 298-page proposal has been blasted by industry groups for being overly complex and for potentially undermining the competitiveness of US markets. Some US regulators including commissioners of the Commodity Futures Trading Commission say the set of rules is unworkable.

The proposal is currently open for public comment until 13 February.



WHAT DO YOU THINK?
 
Name:
   
Email:
   
Comment:
   
Post as Anonymous
  Display name
   
Please, enter security code
   
 

No comments yet.
Login Register Most read Most commented
Username

Password

>> Forgotten your password?
>> Sign Up  

GFS is pleased to offer you a two-week free trial. You will receive a daily email bulletin of the latest regulatory news and analysis and a weekly email round-up. Please complete the free trial form. You will also receive full access to our online site.

EDITOR’S CHOICE

  • Diamond warns against ‘Balkanisation’
  • ABI: UK insurers must keep EU links
  • EU Parliament site hit by hacktivists
  • George Soros: New year, same crisis
  • FSB: Swiss regulator needs more teeth
  • OCC: Deriv fears are an overreaction
  • ‘Major wave’ of Solvency II drafts in May
  • IMF paper urges Aus bank capital boost
  • BoE: Limit bonuses to boost bank capital
  • 2012 vision: Increased regulatory exposure looms
  • Barnier offers hope to NYSE/Boerse
  • Esma rushes short selling consultation
  • Bowles re-elected as Econ chair
  • Hoogervorst hints at accounting slowdown
  • Asia in the year of the dragon
  • Barnier: FTT will not be forced on UK
INTERVIEWS & FEATURES

STRAW POLL

Will markets in 2012 have a tougher time than 2011?

Yes

No

Don’t know

View results

FIND A REGION world regions
 
Global Financial Strategy - [email protected] | Home | Legal | Contact design by SDV