What are Volcker metrics?
The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
What are the main prongs of the Volcker Rule?
Per the 2013 Final Rule “trading account” was defined based on three main prongs: (1) short-term intent prong1, (2) market risk capital prong2, and (3) dealer prong3.
What is super 23A?
Revisions to Super 23A The so-called Super 23A provisions of the Volcker Rule generally prohibit “covered transactions” between a covered fund and a banking entity (and the affiliates of such banking entity) that sponsors or advises or organizes and offers such fund.
What are backstop provisions?
Key Takeaways. A back stop is the act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares.
How did Volker stop inflation?
Then came Volcker. Six days after Burns’s address, Volcker announced that, instead of directly targeting interest rates, the Fed would target the volume of bank reserves in the system. And it would allow the federal funds rate to go as high as needed to reduce reserves.
What is Section 23B?
Section 23B provides that most transactions between a bank and its affiliates must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank as those prevailing at the time for comparable transactions with or involving nonaffiliated companies.
What is backstop value?
Backstop purchasers are a form of standby underwriting, where one or more investment banks enter into an accord with a company and agree to publicly sell any of its unsubscribed shares for a price generally no less than the subscription price associated with the rights offering.
What is’riskless principal’?
What is ‘Riskless Principal’. In order to qualify for riskless principal trades, the Financial Industry Regulatory Authority (FINRA) stipulates that the trades should be executed at the same price, exclusive of a markup/markdown, commission or other fees.
What are the metrics on risk and position limits?
The metrics on risk and position limits and usage; risk factor sensitivities; value-at-risk and stress value at risk are designed to determine the overall risk profiles of trading activities.
Why is the Volcker Rule bad for banks?
The Volcker Rule prohibits banks from using their own accounts for short-term proprietary trading of securities, derivatives, and commodity futures, as well as options on any of these instruments. The main criticism of the Volcker Rule is that it will reduce liquidity due to a reduction in banks’ market-making activities.
What does NASDAQ mean by riskless principal?
NASD Notice on Riskless Principal. “In Nasdaq, a riskless principal trade is one in which a broker/dealer, after having received an order to buy (sell) a security, purchases (sells) the security as principal, at the same price, to satisfy that order. The broker/dealer generally charges its customer a markup, markdown,…