Bloomberg News

Volcker Rule Costs, Finra Plan, CFTC Swaps Data: Compliance

March 24, 2014

The Volcker Rule will cost U.S. national banks as much as $4.3 billion to implement as it forces them to sell restricted investments at a loss, according to a study by the Office of the Comptroller of the Currency.

The regulator estimates implementation costs between $413 million and $4.3 billion for banks it supervises, the OCC said in a report released March 20. Most of the potential costs could come from the rule’s curbs on certain investments, such as in some collateralized loan obligations. The agency also said affected banks will mostly be those with more than $10 billion in assets and could include as many as seven community banks.

The March 20 analysis focuses just on OCC-supervised firms -- mostly on 46 larger banks -- and not on costs from implementation by other agencies, including the Federal Reserve and Securities and Exchange Commission.

Regulators have already responded to some Volcker Rule complaints by the banking industry, including concerns of community banks relating to trust-preferred securities.

Compliance Policy

Sifma Won’t Support Finra Plan on Retail Brokerage Accounts

The Securities Industry and Financial Markets Association will not support Finra’s plan to monitor risk data in retail brokerage accounts, the group said.

The Financial Industry Regulatory Authority’s Comprehensive Automated Risk Data System “would be a massive and invasive regulatory undertaking with serious privacy implications for the general public and added technology costs and regulatory burdens for the financial industry,” Sifma said.

More information and further analysis is needed before proceeding with the plan, the industry group said.

Compliance Action

CFTC Begins Swaps-Data Overhaul in Effort to Boost Comprehension

The Commodity Futures Trading Commission, citing an inability to fully understand swaps-market data, has begun an overhaul of information collected by the Depository Trust & Clearing Corp., CME Group Inc. (CME:US) and others.

The commission released a request for comment last week on about 70 questions on ways to change how and which information must be reported to the swap-data repositories created under Dodd-Frank Act rules. The CFTC could later propose changes to policies intended to help regulators supervise the $693 trillion market.

DTCC is reviewing the agency’s request for comment and “looks forward to continue working with the CFTC to support regulatory and industry efforts to enhance transparency,” Marisol Collazo, chief executive officer of DTCC’s data repository, said in a statement. Laurie Bischel, a CME spokeswoman, declined to comment on the CFTC’s request.


U.K. Watchdog Head Says Banks Should Have Known About Chat Rooms

Investment banks should have known about foreign-exchange traders using chat rooms that had the potential to rig currency prices, the head of the U.K.’s financial regulator said.

There should have been controls over bank employees that conduct trades and are allowed to submit rates, Martin Wheatley, the Financial Conduct Authority’s chief executive officer, said in an interview with Bloomberg TV’s Angie Lau in Hong Kong.

“It’s incredible that a bank should not know that traders having unmonitored access to private chat rooms to talk to a bunch of mates that they’ve had relationships with or worked with over the years,” Wheatley, 55, said.

The FCA said in October it was opening a formal probe into currency-rate trading, joining regulators in the U.S. and Switzerland in reviewing the $5.3 trillion-a-day market.

“The surprise for me is that the banks did not check, did not do their homework, and look at how chat rooms were being used,” Wheatley said.

To contact the reporter on this story: Carla Main in New York at

To contact the editors responsible for this story: Michael Hytha at Stephen Farr, Mary Romano

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