Bank of America executive: Volcker Rule fuels private trading firms' rise

(Reuters) – U.S. post-financial crisis rules that place strong trading restrictions on banks has fueled the rise of private trading firms that have grabbed market share, a top Bank of America Corp executive said on Tuesday.

In particular, Chief Operating Officer Tom Montag mentioned the “Volcker Rule,” named after former Federal Reserve Chairman Paul Volcker, which prevents banks from making directional bets on market moves.

Montag said Virtu Financial Inc and Tradeweb Markets were two trading firms that have taken share from large banks in products such equities and U.S. Treasury bonds.

He said because they face fewer restrictions, the firms are able to move more quickly than banks and use information they gather for trading.

“The rise of the private trading firm is real,” Montag said, adding that “it has changed the dynamic of the markets.”

Turning to Bank of America’s near-term performance, Montag said the trading environment in the fourth quarter “remains muted,” similar to the third quarter. He declined to provide any numbers about the bank’s trading performance.

Regarding its plans related to Britain’s plans to leave the European Union, Montag said B of A will move people out of London to Dublin, but mostly to Paris and Frankfurt. He estimated Bank of America will relocate about 200 employees from the bank’s sales and trading operations.

Reporting by Dan Freed in New York; Editing by Jeffrey Benkoe

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