While some critics have criticized the recent Volcker Rule proposals for giving the banks too much discretion over key components, others have suggested that some provisions represent a profound sea change for Wall Street.

DealBook notes that Wall Street may struggle to grapple with proposals that would require them to hand out bonuses in a way that does not encourage proprietary risk taking. That would seem to suggest that traders could be measured mainly by the commission dollars and spread dollars they bring in--the triumph of the staid "flow" traders.

All this will be hard to manage, as keeping up with all offsetting positions to make sure they are not so large as to constitute something other than legitimate hedging or market-making could get really tricky. The proposals require an extensive compliance program to be implemented by banks. They will be responsible for creating a host of new metrics that must be turned over the regulators. The compliance burden will be heavy. The IT investment will not be trivial.

Already there is talk that the likes of Goldman Sachs and Morgan Stanley will seek to drop their bank holding company status to avoid the rules. Others think that many traders will leave the bulge bracket type firms and move over the hedge funds, which we've been talking about a lot.

These rules are not yet set in stone. There is still time for comment, and we'll see the Wall Street lobby make its voice heard. This has the potential to crop up as a political issue, as it will be easy to paint this as another misguided government intrusion in the banking market.

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