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Market Update

U.S. Regulators Unveil Volcker Rule Details


Author: Nichole Harper
ticker.com
Last Update: 5:11 PM ET December 10 2013

11:15 AM New York – Stocks in New York traded sideways and investors looked ahead to Fed meeting in two weeks. U.S. financial regulators unveiled a key element of the financial reform legislation enacted in 2010. General Motors appoints Mary Barra to replace Dan Akerson as chief executive.

U.S. financial regulators today released the central element of the landmark 2010 reform law Congress passed after the U.S. financial crisis in 2008 than plunged the world economy in the recession.

The rule restricts banks from using federally insured deposits for proprietary trading and taking risks to generate profits. The rule also prevents banks from taking ownership stakes in hedge funds and private equity funds.

Most banks have already closed their proprietary trading desks but banks continue to take controversial positions that are hard to qualify whether these positions are for market making activities, hedging the markets or purely speculative purposes.

For example, the $6 billion “London Whale” loss at JP Morgan stemmed from what the bank called hedging activities. However, the move required the bank to draw from the federally insured deposits.

S&P 500 index declined 1.62 to 1,806.75 and the Nasdaq Composite Index fell 5.54 to 4,063.21.

European Markets Trade Lower

In London trading, FTSE 100 index fell 0.4% or 26.98 to 6,533 and in Frankfurt the DAX index decreased 0.9% or 88.33 to 9,105.

In Paris, CAC 40 index slipped 0.8% or 32.46 to 4,102.

Asian Markets Fall

Market indexes in Japan declined after surging by 2.3%, the best single day gain since May.

Large Japanese companies turned less positive for business conditions in the current quarter, according to a government survey.

Also, increasingly banks and economists are looking for additional stimulus from the Bank of Japan in the next six months.

In China, industrial production surged 10% in November from a year ago after rising 10.3% in October. Yesterday, China reported a surge in trade surplus and exports gained faster than imports.

Market indexes in India slipped a fraction and rupee held firm a day after opposition party registered solid gains in four state elections raising a prospect of a government change in the national election in 2014.

U.S. Stocks Review

General Motors (GM) declined 0.4% and the automaker appointed Mary Barra to replace Chief Executive Dan Akerson. Barra will be the first woman to lead a major automaker.

A day ago, the government said it sold its last remaining stake in the company and took a total loss of $10 billion in the investment in the company made at the height of the financial crisis in 2008 and 2009.

Lululemon Athletica Inc (LULU) increased 14 cents and the company appointed a new chief executive and founder Chip Wilson stepped down.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc