ExigerTech President Brandon Daniels spoke with the Wall Street Journal about the newly implemented Volcker Rule and what it means for the banking industry. Daniels notes that companies’ risk exposure will increase as they scramble to comply with new areas of the Rule.
“Volcker rule” arrived Wednesday but there are still issues banks are tracking. Some language in the rule will impact the corporate funding space leaving banks with contractual arrangements such as fund-linked securities that banks offer in order to bridge funding requirements and investor demand for PE funds, hedge funds, among others, said Brandon Daniels.
“When Volcker is implemented, banks will no longer be able to offer these securities because they will no longer be able to hedge their risk,” he said. Daniels said the Volcker rule also doesn’t clearly address what level of analysis must be done on non-financial bank-owned entities. He added that overall regulators aren’t giving advice on interpretation of the rule. “Or, the billion dollar question, what kind of penalties could exist if you do not comply with the Rule in one area or another?” he said.