Fitch Ratings expects the Federal Reserve's notice of proposed rulemaking to simplify the Volcker rule to lower the compliance and regulatory requirements associated with the rule, and it views the proposal as credit neutral.
According to Fitch, the proposed rule is based more on activities than the rule in its present form, and the proposed rule, if passed, will provide the most relief to banks with limited or little trading activities.
The rating agency further said that the banks will have to continue to assign capital where returns above the cost of capital can be attained, providing some limits around trading inventory. In addition, change to the Volcker rule, according to Fitch, will not result in increased proprietary trading.
