CFTC Commissioner Bart Chilton wrote to Federal Reserve Chairman Bernanke suggesting a narrowed definition of hedging to be allowed under the Volcker Rule.
Chilton stressed that defining the scope of “risk-mitigating activities” in the final rule is “critically important.” Chilton attached proposed rule text language that says banks’ warehousing, delivery mechanisms and other physical commodities activities should not result in an “end-run” to the final Volcker Rule.
Chilton argues that the Federal Reserve and Congress should not allow banks to operate physical commodities businesses due to the existing conflict of interests.
Read the letter.
Read the attached proposed rule text language.