The Securities Industry and Financial Markets Association (SIFMA) is lobbying against efforts by the Labor Department to mandate the spinoff of bank derivatives departments.
The proposed Volcker Rule would place severe restrictions on banks’ ability to invest in the markets for their own accounts as well as limit their exposure to hedge funds and private equity.
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The initial draft of the Volcker Rule would have placed 80% of the $50 trillion global debt market under such restrictions.
Business groups have used the judicial system to block certain other financial reforms so it is likely litigation will be used to also block or, at least, delay the Volcker Rule.
The US Chamber of Commerce along with the Business Roundtable sued the SEC in 2010 over a proposed rule to make it easier for shareholders to unseat corporate directors.
In late 2011, SIFMA sued the Commodities Futures Trading Commission (CFTC) over a rule setting limits on speculative trading.
Derivatives trading reaches into the compensation pockets of executives so there is much more at stake with the Volcker Rule. Restrictions
on such trading would cut into banker bonuses.
Talks of a lawsuit are still premature since the Volcker Rule has yet to be finalized.