Thursday, February 4, 2010

Volcker rule -- great in theory but ...

Recent piece in WSJ finance section about how it might be difficult in practice to ban banks from trading on their own accounts. Sometimes a bank customer wants to sell a security and there is no buyer. Now the bank can buy the asset and sell another one to, in effect, create a market. If the new legislation is not thought through carefully enough, this sort of non-proprietray trading may be banned as well.

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