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Prohibitions and Restrictions on Proprietary Trading and Certain Interests In, and Relationships With, Hedge Funds: CFTC | Speeches and Testimony

Statement of Commissioner Scott D. O’Malia January 11, 2012 Introduction The Commission is considering today a Notice of Proposed Rulemaking (“Proposal”) to implement the statutory requirements of Section 619 of the Dodd-Frank Act (the “DFA”), amending the Bank Holding Company Act of 1956, commonly known as the “Volcker Rule”. Congress gave us a difficult mandate to separate proprietary trading from legitimate and essential market-making, underwriting and hedging responsibilities. However, establishing a bright line is far easier said than done. Today’s Proposal sets in motion what Sheila Bair, the former Chairman of the Federal Deposit Insurance Corporation and a former Acting Chairman and Commissioner of the CFTC, aptly described as an “[u]nder…300-page Rube Goldberg contraption of a regulation….proposed by federal agencies [(the Joint Proposal”)] to implement the Volcker Rule.” 1 The deadline for comments on the Joint Proposal was recently extended anothe