The Federal Reserve Board published research examining how the Volcker Rule affected trading revenue at the 21 largest US trading firms during a 100-day stress period centered on the COVID-19 financial crisis. The paper finds that, despite elevated market volatility, trading profits were consistent with volume-driven fees and commissions and with widening bid-ask spreads. Using a novel data collection, the study adds to evidence that the Volcker Rule’s effects on trading-related revenue are associated with increased financial stability and reduced exposure to market shocks.
Federal Reserve Board research assesses the Volcker Rule’s impact on trading revenues of the 21 largest US trading firms during the COVID-19 stress period
The Federal Reserve Board released research analyzing the impact of the Volcker Rule on trading revenue at the 21 largest US trading firms during the COVID-19 crisis. The study found that trading profits aligned with volume-driven fees and widening bid-ask spreads, suggesting the rule contributes to financial stability and reduced market shock exposure.