Volcker rule could hurt liquidity in FX spot market, participants warn
Foreign exchange swaps and forwards should be exempted from the Dodd-Frank ban on prop trading, or else liquidity in the spot market could suffer, industry participants say
The Volcker rule – a key component of the US Dodd-Frank Act designed to put an end to proprietary trading by banks – poses a threat to liquidity in the foreign exchange market and could lead to significantly increased transaction costs, according to market participants.
Originally conceived by former US Federal Reserve chairman Paul Volcker, the rule would prohibit banks from engaging in prop
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