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The Volcker Rule: Will It Give Banks More Data to Manage?

by on October 18, 2011

There’s yet another new banking regulation on the table—and this one’s making some waves. This time, the FDIC, SEC and other regulators are taking aim at how banks conduct their trading activity. The Volcker Rule—by far the most significant provision of the Dodd-Frank financial overhaul legislation passed last year—is designed to limit banks’ proprietary trading (trading conducted for the banks’ own profit and not on behalf of their clients). Proprietary trading is apparently a very profitable venture for many of our nation’s largest banks. They’ve been fighting the Volcker Rule tooth and nail, having spent a whopping $17.2 million just last year to lobby on the proposed regulation, according to The Hill.com.

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Obviously, banks are up in arms about the Volcker Rule because they stand to lose some revenue as a result of its proposed restrictions. But banks are also resistant because the proposed regulation creates, according to the head of the Securities Industry and Financial Markets Association’s Washington office, “an overly complex and burdensome compliance regime.”

While no one’s talking specifically about the data impact yet, more compliance usually does mean more data to manage. The Volcker Rule likely will be no exception. The regulation spells out certain activities that are exempt from its proprietary trading ban. Demonstrating that their activities comply with the regulation requires banks to track information about each and every trade. For an industry that’s already struggling with how to manage seemingly infinite data stores, adding to that burden could be overwhelming.

The Volcker Rule was released last week in proposal form, is now open to public comment for 90 days and is slated to take effect in July. The banking industry is continuing to protest the Volcker Rule in its current form, and there’s no telling what the final product will look like. But one thing’s for sure: Once this new regulation takes effect, our clients and other firms in the financial services industry will need more than ever an affordable, easy-to-manage, long-term solution for storing all that data. With product and service offerings designed to help clients manage the ever-expanding data universe efficiently and effectively on tape, we’ll be keeping a close eye on the developments surrounding the Volcker Rule.

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