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How Will the Volcker Rule Impact You?

The much-publicized regulation requires significant changes for banks. Heres how it will affect derivatives end users.

By Treasury & Risk Staff | Updated on January 02, 2014

Finalized in mid-December, the Volcker Rule prohibits banks from engaging in speculative securities trading, also called proprietary trading. Banks must demonstrate that every derivatives trade they make is designed to hedge a specific risk—except for trades made on behalf of clients. The banks’ CEOs must attest to their compliance with the rule.

The purpose is to improve financial market stability, but the Volcker Rule may have a big impact on corporate treasurers who use derivatives to hedge interest rate, foreign exchange, and other financial risks.

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