After the post-mortems to the passage of the Dodd-Frank financial reform bill, I was under the impression that the Volcker Rule, which purports to ban deposit-taking institutions from engaging in proprietary trading, had been weakened to the point where its prohibition was merely notional for the foreseeable future. For one thing, Scott Brown managed to get the ban on FDIC-insured banks investing in hedge and PE funds scratched at the last minute. I thought that implementation of the surviving provisions had been placed on a long slow track. And indeed, regulations regarding how proprietary trading will be defined and how the ban will be enforced are
not due for nine more months and remain very much a matter of contention.
So I was surprised by
this in yesterday's WSJ:
Morgan Stanley reached an agreement with proprietary-trading chief Peter Muller that will allow his team of traders to form a new firm at the end of 2012, people familiar with the matter said.
The widely anticipated deal is the latest exit by high-profile traders from traditional Wall Street firms because of the Volcker rule, approved as part of last year's Dodd-Frank financial-overhaul law...[snip]
