Singapore banks slam Volcker Rule; demand exemptions

One banker’s feast is another’s poison pill it seems.

The controversial “Volcker Rule” intended to curb rapacious proprietary trading excesses by U.S. banks and financial institutions is being assailed by Singapore’s banking industry

Speaking through the Association of Banks in Singapore, the city-state’s banks argue the Volcker Rule will restrict their activities outside the United States, and will be a significant intrusion into the non-U.S. activities of foreign banks and their affiliates.

The Volcker Rule will be implemented this July 21 as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act and will prohibit banks from proprietary trading except that of U.S. Treasuries and bonds.

Once implemented, the law will prohibit Singapore banks from trading Singapore Government Securities issued by the Monetary Authority of Singapore while U.S. banks operating in Singapore will be able to deal in U.S. Treasuries.

ABS has submitted a position paper to U.S. authorities, including the Department of the Treasury, the Federal Reserve and the Securities and Exchange Commission.

ABS executive director Ong-Ang Ai Boon said Singapore’s banks have applied for an exemption to the new rules.

'We don't pose a risk to them, we're relatively small and it would require onerous reporting requirements to comply,' she said.

Regulators from Canada, the UK and the European Union are on the same side as Singapore, saying that the proposed ban on proprietary trading by federally insured banks would restrict foreign sovereign debt markets while exempting U.S. Treasuries.

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