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Alternative Market Briefing

Fed to extend banks' deadlines for winding down private equity firms, hedge funds and specialty securities

Friday, December 19, 2014

Komfie Manalo, Opalesque Asia:

Wall Street received an early Christmas gift Thursday after the Federal Reserve announced it would delay by one year the implementation of the Volcker Rule, specifically the ban on banks to engage in proprietary trading, reports said.

On top of that, the central bank said it was also planning to extend the deadline for banks to wind down their exposures in private equity firms, hedge funds and specialty securities projects by another 12 months in 2015, which would grant Wall Street a two-year reprieve until the elections in 2016.

The decision of the Feds to delay the implementation of a key provision of the Volcker Rule will allow financial lobbyists additional time to eventually kill the regulation before it can be fully implemented, insiders say.

The move also comes less than a week after Congress delayed the implementation of another financial reform provision under the Dodd-Frank Act, particularly the swaps push-out rule that eliminated federal subsidies for trading in risky derivatives.

Dennis Kelleher, president and CEO of financial reform advocacy group Better Markets, was quoted as saying, "The Street has had years of notice to unwind these investments, and it appears that their self-serving complaints have been accepted fairly uncritically without a real analysis for the basis of the claim.......................

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