The Volcker Rule has inspired a lot of debate since it became law as part of Dodd-Frank. The opinions run the gamut. Some note Goldman Sachs and Morgan Stanley have dismantled prop trading units, a sign that the rule has real teeth. Others think prop trading will continue to exist as part of market making operations. Others wonder if the apparent exception for principal transactions is a flaw.

In the end, companies will choose how they want to approach the law--if they want to honor the spirit of the law or find legal loopholes.

An interesting idea comes from the Financial Stability Oversight Council, which is charged with preventing a repeat of the 2008 financial crisis. It released a study recommending regulators mandate a 'public attestation' on compliance by CEOs, reports Bloomberg. That is, CEOs should be required to sign off, not unlike the CEO and CFO have to sign off on the veracity of financial statements, as required by Sarbanes-Oxley.

Putting the CEO on the hook may lessen his or her appetite to play games with the Volcker Rule. All agree that there is a lot of grey area when it comes to enforcing the ban on trading with insured funds.

The new 81-page report offers other ideas, like programming systems to identify prop vs. agency trades.

For more:
- here's the Bloomberg article

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