July 31, 2018
Regulators shouldnt give big banks Volcker exemption. Large banks already have many advantages, especially advantages in data and flow
Even without volcker exmeption, big banks can find ways around regulation. One example is high touch and low trading facilitation and centralized risk heading in central risk book. Banks central risk book can use client transaction data to develop trading models that will take advantage from clients. Central risk book can easily buy and sell securities using banks money without model control and governance, such activity is very similar to prop trading. In banks dark pool, central risk book can sweep premium liquidity like retail flow even before clients.
In summary, exempt Volcker will most likely benefit big banks which introduce systematic risk.