Advisory services in the area of implementation of the US regulation the Volcker Rule and its European equivalent, known as the Liikanen proposal.
Implementation of the US Volcker Rule and its EU equivalent the Liikanen proposal.
In Europe the Liikanen proposal, a similar proposal to the Volcker Rule, will most probably apply to the largest EU banks and their financial groups’ members.
The rules in general prohibit banking entities from:
The goal of the regulations is to reduce excessive risk taking and prevent rapid balance sheet growth as a result of trading activities. The regulations impose the mandatory separation of proprietary trading and establishes a framework for competent authorities to take measures to reduce excessive risk taking. Trading activities other than proprietary trading would be subject to a risk assessment. If a competent authority finds that an excessive risk exists, it could require trading activities to be separated from the core credit institution, or demand an increase in the core credit institution's own fund requirements, or impose other prudential measures.
The above is to be followed by implementation of an extensive compliance program and control framework, designed to ensure that the bank has robust risk management processes, monitoring and surveillance, limits, remediation processes, independent testing, reporting, training and recording keeping (the proof of the implementation and effectiveness of the above solutions).
Advisory services provided by KPMG may cover: