Volcker rule to curb Wall Street bank trading bets

By Emily Stephenson and Douwe Miedema WASHINGTON (Reuters) - Wall Street banks will need to prove to regulators their trades are done on behalf of clients or to protect against market risks and are not speculative bets for their own profit, under the final version of the Volcker rule released by U.S. officials on Tuesday. The rule - which five regulatory agencies are expected to adopt later in the day - appears to more sharply crack down on so-called proprietary trading than when it was proposed two years ago, likely disappointing banks hoping for more leeway. Named after former Federal Reserve Chairman Paul Volcker, who championed the reform, the rule prohibits banks from betting on financial markets with their own money and is a crucial part of the efforts to reform Wall Street. The regulators also seek to put an end to so-called portfolio hedging, a practice in which banks entered all kinds of trades that were supposed to hedge risk elsewhere in the business but that could be used as veiled speculation.

http://news.yahoo.com/u-set-adopt-volcker-rule-curb-bank-trading-061341135--sector.html