Volcker Rule

Glossary

Banking

Volcker Rule

The Volcker Rule, named after former Federal Reserve chair Paul Volcker, refers to section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a sweeping piece of post global financial crisis US legislation enacted by Congress and drafted by the Federal Reserve Board, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and Securities and Exchange Commission. The Volcker Rule prohibits or severely restricts banks from engaging in proprietary trading or dealing with, investing in or sponsoring hedge funds and private equity funds. The rule was passed in order to prevent conflicts of interest and to prevent banks from endangering the financial system by making speculative investments.

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