Created with Sketch.Menu Transparency
	Contact Us Search
Search
 Main navigation

      
      About the CFTC
                          The Commission
                        Chairman & Commissioners
                        CFTC Organization
                        Advisory Committees
                        Budget & Performance
                        Privacy at the CFTC
                        Careers
                        Diversity and Inclusion at the CFTC
                        Industry Oversight
                          Industry Filings
                        Trading Organizations
                        Clearing Organizations
                        Data Repositories
                        Intermediaries
                        Market Surveillance
                        Contracts & Products
                        Rules & Rule Amendments
                        Anti-Money Laundering
                        Law & Regulation
                          Commodity Exchange Act & Regulations
                        How Rules Are Made
                        Holding Wrongdoers Accountable
                        Federal Register
                        Public Comments
                        CFTC Staff Letters
                        Office of Technology Innovation
                        Market Data & Economic Analysis
                          Data at CFTC
                        Commitments of Traders
                        Bank Participation Reports
                        Cotton On-Call
                        Financial Data for FCMS
                        Net Position Changes Data
                        Staff Reports
                        Weekly Swaps Report
                        Cleared Margin Reports
                        Office of the Chief Economist
                        Forms & Submissions
                        Learn & Protect
                          Check Registration & Disciplinary History
                        Submit a Tip
                        Reparations Program
                        RED List
                        Advisories & Articles
                        Videos
                        Publications
                        News & Events
                          Press Releases
                        Public Statements & Remarks
                        Events Carousel Rotation On
              On


News & Events
  

        
      Press Releases
                        Public Statements & Remarks
                        EventsPublic Statements & Remarks
  

        
      Chairman Rostin Behnam
                        Commissioner Kristin N. Johnson
                        Commissioner Christy Goldsmith Romero
                        Commissioner Summer K. Mersinger
                        Commissioner Caroline D. Pham Public Statements & RemarksDissenting Statement of Commissioner Rostin Behnam Regarding Amendments to the Volcker Rule

September 16, 2019

I respectfully dissent as to the Commission’s decision to approve revisions to the Volcker Rule.  In June 2018, when I voted against the proposed rule, I expressed that my biggest concern was that our action would encourage a return to the risky activities that led to the financial crisis, and perhaps further consolidate trading activity into a few institutions.[1]My concern last June was that we were weakening the Volcker Rule around the edges, and I raised specific issues regarding unnecessary complexity, lack of clarity, and a flawed process that chilled dissent.  Unfortunately, today’s final rule does not do anything to assuage these concerns.  To make matters worse, while the proposal merely threatened to kill Volcker through a thousand little cuts, the final rule goes for the throat.  It significantly weakens the prohibition on proprietary trading by narrowing the scope of financial instruments subject to the Volcker Rule.   What remains is so watered down that it leaves one questioning whether it should be called the Volcker rule at all.  To that point, Paul Volcker himself recently sent a letter to the Chairman of the Federal Reserve criticizing the rule and stating that the rule “amplifies risk in the financial system, increases moral hazard and erodes protections against conflicts of interest that were so glaringly on display during the last crisis.”[2]

In my dissent last June, I pointed out that the proposal further complicated the Volcker rule while calling it simplification.  We do the same thing in the final rule.  Where once there was one set of rules for all banking entities, there will now be three categories of banking entities with different rules for each:  Banking entities with Significant trading assets and liabilities, banking entities with Limited trading assets and liabilities, banking entities in between with Moderate trading assets and liabilities.  While numerous commenters expressed concerns with this three-tiered compliance framework, we nonetheless are finalizing this needlessly complex system.  In addition, the majority today makes “targeted adjustments” that further complicate matters.  In some instances, these adjustments are at least requested by the commenters.  In others, they are invented seemingly out of whole cloth.

The most troubling aspect of today’s rule, though, is something new.  The final rule includes changes to the definition of “trading account” that will significantly reduce the scope of financial instruments subject to the Volcker Rule’s prohibition on proprietary trading.  This change is described in the preamble to the final rule as avoiding having the trading account definition “inappropriately scope in” certain financial instruments, almost as if they were included in the proposal’s scope by mistake.  However, these financial instruments were within the scope of the 2013 rule, and they were within the scope of the proposal.  Removing them now limits the scope of the Volcker rule so significantly that it no longer will provide meaningful constraints on speculative proprietary trading by banks.  As such, I cannot vote for the rule.

[1]Opening Statement of Commissioner Rostin Behnam Before the Open Commission Meeting on June 4, 2018 (Jun. 4, 2018),https://www.cftc.gov/PressRoom/SpeechesTestimony/behnamstatement060418.

[2]Jesse Hamilton and Yalman Onaran, “Vocker the Man Blasts Volcker the Rule in Letter to Fed Chair,” Bloomberg (Sep. 10, 2019),https://www.bloomberg.com/news/articles/2019-09-10/volcker-the-man-blasts-volcker-the-rule-in-letter-to-fed-chair. News & Events
  

        
      Press Releases
                        Public Statements & Remarks
                        Events Public Statements & Remarks
  

        
      Chairman Rostin Behnam
                        Commissioner Kristin N. Johnson
                        Commissioner Christy Goldsmith Romero
                        Commissioner Summer K. Mersinger
                        Commissioner Caroline D. Pham
 RELATED LINKS
    

      CFTC to Hold an Open Commission Meeting on September 16


Resources

CFTC Regulations
	Commodity Exchange Act
	Privacy Policy
	Web Policy
	FOIA
	EEO Statement
	No Fear Act
	Accessibility Statement
	Procurement
	USA.gov
	Glossary

Actions

Search Public Comments
	Submit Tips & Complaints
	Search Industry FilingsWhistleblower.gov
	Office of Technology InnovationInspector GeneralSitemap

HomeCFTC Headquarters
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
202.418.5000