Volcker Rule Faces Critics as Effective Date Nears
(Corrects title of HSBC's Alderoty in 15th paragraph of story published Feb. 14.)
Feb. 14 (Bloomberg) -- The world's largest banks demanded a wish list of changes to a proposed U.S. ban on proprietary trading, seeking to escalate the lobbying effort against the Volcker rule five months before it takes effect.
In scores of comment letters filed yesterday, bankers and their trade associations said the so-called Volcker rule would increase risk, raise investor costs, hurt U.S. competitiveness and be vulnerable to legal challenge.
“The proposal, if implemented in its current form, will overly restrain our customer-facing market-making business and our risk-mitigating hedging activities to the detriment of our customers,” Colm Kelleher, co-president of Morgan Stanley's institutional securities group, and Jim Rosenthal, the firm's chief operating officer, wrote in a letter posted to the Commodity Futures Trading Commission's website. “Moreover, we believe that the proposal, if implemented as is, would have severe negative consequence for the markets and the U.S. financial system.”