Media Advisory: Hal Scott Urges Narrow Application of Volcker Rule to Allow Bank Market Making, Hedging, other Dodd-Frank Permitted Activities
WASHINGTON, June 16, 2011 /PRNewswire-USNewswire/ -- In his testimony this afternoon to the House Financial Services Committee, Hal S. Scott, Director of the Committee on Capital Markets Regulation and the Nomura Professor and Director of the Program on International Financial Systems at Harvard Law School, is urging the U.S. to adopt a five-point approach to the financial regulatory rulemaking process to both protect the global capital markets and enhance the global competitiveness of U.S. markets. His points:
- A sufficiently narrow approach to defining Proprietary Trading under the Volcker Rule will avert effectively denying to banks several key risk control activities permitted under Dodd-Frank.
- U.S. initiatives that clash with E.U. initiatives on derivatives trading should be set aside for now so U.S. rules can be defined in concert with the E.U.
- The long, full phase-in time for revised capital requirements provided under Basel should be used in order to minimize the differential impact of these requirements on different banks in different countries.
- Systemically important firms should designated on a global basis—only where there is agreement among countries about which firms should be designated – and the U.S. national process should be tightly coordinated with the work of the Financial Stability Board—the body created by G-20 leaders in 2009 to help develop global economic governance.
- The U.S. should continue to work with the FSB to achieve an approach to the resolution of failed firms this is as internationally coordinated as possible.
Prof. Scott's central emphasis on the global competitive strength of U.S. capital markets, which CCMR quarterly studies have shown has been deteriorating over the past five years. Links to his written Congressional testimony today, as well as the latest CCMR competitiveness study, both are available at the CCMR Web site. www.capmktsreg.org.
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SOURCE Committee on Capital Markets Regulation