Prop trading ban set to crimp market-making and hedging activities

Putting a stop to prop

stop-hand
Putting a stop to prop

Alan Turing's famous test of machine intelligence asks a questioner to tell computer from human by the answers each provides. The assumption is that these outputs can be used to conclude something about what’s going on inside each of the respondents. US regulators now need to come up with a similar test, or series of tests, to tell the difference between market-making, hedging and proprietary trading, the last of which is outlawed by the so-called Volcker rule – part of the Dodd-Frank Act.

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