Volcker Revision Will Boost Banks, Which Are Already Well-positioned

The new Volcker rule comes at an opportune time for banks, which are poised to ride a new wave of global market volatility.

The proposed changes unveiled by the Federal Reserve Wednesday would preserve the prohibition on proprietary trading by banks that enjoy government backstops. But it lightens and simplifies enforcement of the rule, giving bank managers more leeway to set limits on trader behavior.

For banks with big trading operations, the most immediate impact will be lower compliance costs. While welcome, this is unlikely to affect their share prices. The bigger question is will the rule change lift bank trading revenue.

An expanded version of this report appears at WSJ.com

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