Bank Structural Reforms
Various reforms have been or are being undertaken to make the financial system more stable and reduce risk transfers from market to retail activities.
Some of the ongoing structural reforms that have been implemented include:
- The French Banking Law (on the Separation and Regulation of Banking Activities) released on the 26th of July 2013 aims to segregate proprietary speculative activities that a bank might be conducting on markets.
This law prohibits proprietary trading and limits certain fund activities on purely directional positions. There is no prohibition if the activity is segregated in a separately capitalized entity, not guaranteed by SG, and supervised on a standalone basis.
The Volcker rule (section 619 of Dodd-Frank Act in the US) released on the 11th of October 2012 aims to to regulate and limit investment in and sponsorship of private funds by banks and their subsidiaries, including subsidiaries of the banks’ management companies.
This rule restricts:
- Short term proprietary trading for its own account;
- Owning, sponsoring or certain relationships with hedge funds, private equity funds, or certain covered funds.
Societe Generale also follows ongoing initiatives at the EU (Liikanen) and UK (Vickers) levels.