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 2025-01-01
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.