볼커 룰(Volcker Rule)의 기본구조, 최종규칙 및 그 영향

Abstract

Following the financial crisis of 2007-2008, the U.S. government introduced a number of legislative measures in order to achieve across-the-board reform of the country’s financial regulatory system. Experts agree that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) is one of these measures. It was enacted in July 2010 and brought the most significant and sweeping changes to the financial regulatory environment in the United States. In particular, section 619 of the new law, which is commonly referred to as the “Volcker Rule,” continues to receive attention as one of the most forceful provisions adopted by the U.S. Congress. This is because it is far-reaching and covers both U.S. banking entities and non-banking financial companies with U.S. banking operations. In addition, a commission made up of five federal regulatory agencies – the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Commodity Futures Trading Commission - approved and issued on December 10, 2013 the Final Rules, which were developed jointly to implement the same section of the Volcker Rule. Under the Final Rules, insured depository institutions and companies affiliated with insured depository institutions ("banking entities") cannot: • engage in short-term proprietary trading; or • acquire or retain any equity, partnership or other ownership interest in or sponsor a hedge fund or a private equity fund. Also, under the same rules, banking entities are required to develop a compliance program designed to bring the banking entity into compliance with the Volcker Rule. The Final Rules became effective on April 1, 2014, with a conformance period until July 21, 2015, The Volcker Rule’s purpose, as former Federal Reserve chairman Paul Volcker noted, is to “keep banks, whose deposits are federally insured, from taking excessive risks”, which contributed to the 2007-2008 financial crisis, “based on the funding advantage that they get from implied government support.” The proposed rules were first approved and released in October 2011. After problems occurred the following year, however, including large trading losses that took place at JP Morgan Chase based on transactions booked through its London branch, modifications and revisions were made in such ways that the new rule imposed stricter limitations on proprietary trading and required federally insured investment companies to strengthen their management ethics before the final Volcker Rule regulations were released and adopted by the agencies on December 10, 2013. It is noteworthy, however, that whereas the rule requires investment companies to uphold stricter rules on in-house management and market making with respect to hedge transactions and trading position checks, it provides regulation-easing provisions by narrowing the scope of regulation and listing permitted activities. Finally, as the Volcker Rule becomes effective, it is expected that the compliance costs of financial institutions will rise, whereas profitability of their trading activities may drop. Also, under any circumstances where market making is not easily available, the capital mobility of financial markets is likely to decrease as a result. From this perspective, the author suggests that in order to prevent such problems from occurring and ensure the proper functioning and integrity of the country’s overall financial system, financial regulatory agencies in the United States should continue to not just develop such financial regulatory techniques but also to track and analyze their effects on financial markets.