The Federal Reserve and four other regulatory agencies gave final approval to changes in the “Volcker rule” on Tuesday, Oct. 8. The rule was passed after the 2008 financial meltdown to crack down on trading excesses that contributed to the crisis.
The changes were backed by the banking industry, which felt the original rule that sought to prevent banks from speculative trading with government-insured deposits was too restrictive.
The new rule continues to prohibit banks from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds. The rule also offers greater clarity for activities that are legal.