WASHINGTON (AP) — U.S. banks will be barred in most cases from trading for their own profit under a federal rule set to be approved Tuesday.
Five U.S. regulatory agencies are voting on the so-called Volcker Rule, a major step toward preventing extreme risk-taking on Wall Street that helped trigger the 2008 financial crisis.
Congress instructed regulators to draft the rule under the 2010 financial overhaul law.
The rule seeks to ban banks from proprietary trading. It’s a practice that has been lucrative for banks. In addition to banning trades for their own profit, the rule limits banks’ investments in hedge funds.
There is an exemption for proprietary trades when they are to facilitate buying and selling investment for customers.
The largest U.S. banks will be required to comply by July 2015.Fox KFXV Entravision Communications