Investopedia

Continue to Site »

Volcker Rule

Filed Under » , , , ,
Dictionary Says

Definition of 'Volcker Rule'

Trading restrictions placed on financial institutions. The Volcker rule separates investment banking, private equity and proprietary trading (hedge fund) sections of financial institutions from their consumer lending arms. Banks are not allowed to simultaneously enter into an advisory and creditor role with clients, such as with private equity firms. The Volcker rule aims to minimize conflicts of interest between banks and their clients through separating the various types of business practices financial institutions engage in.
Investopedia Says

Investopedia explains 'Volcker Rule'

Named after former Federal Reserve Chairman Paul Volcker, the Volcker rule basically stops banks from doing their normal business (installment loans, residential mortgages, equity credit loans, deposit services) as well as trading on their own behalf. The rule was introduced following the recession of 2008, to control the risk associated with the financial sector. Wall Street banks were accused of accumulating an excessive amount of risk and unfair business practices due to the inability of regulators to properly monitor their complex instruments and activities. The Volcker rule aims to protect individuals by creating a more transparent financial framework which can be regulated with greater ease.

Articles Of Interest

  1.

    What You Need To Know About Financial Analysts

    Thinking about relying on analyst recommendations for your next trade? We'll show you what to watch out for.

  2. Wall Street: Where The Customer Is Always Wrong

    In the financial industry, there's not much emphasis placed on dealing with customer complaints, but there should be.

  3. What Would Full Disclosure Mean For The Market?

    In the wake accounting scandals, more people are calling for full disclosure. But what would that even help?

  4. Don't Be Misled By Investment Advertising

    Investment companies and brokers want to sell. Unfortunately, this can result in promotional material that is not entirely frank, or far worse, truly misleading.

  5. Making Sense Of The Tax Code

    If tax rules and regulations are Greek to you, read on to learn how to decipher them.

  6. A Nightmare On Wall Street

    These tales of banking terror sent shivers down the spines of even the most steadfast bankers.

  7. Reg AC: What Does It Mean To Investors?

    In 2003, the SEC issued a new regulation meant to hold analysts more accountable for their reports. Find out what it means.

  8. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.

  9. Financial Career Options For Professionals

    Find out if spreading your wings to try a new career will make you soar or fall flat.

  10. 7 Unconventional Ways Businesses Can Borrow Money

    Find out how your business can get the money it needs - even when the bank says "no".
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center