Volcker rule - CFAs have What would society lose if we made...

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4/14/2014 What should be our expectations of the financial industry with dealing with customers? Should broker dealers be held to a fiduciary standard towards customers The alternative to a broker dealer (who sells you mutual funds/stuff they put together) is a certified financial advisor (CFA). They have no inventory of product They have a fiduciary obligation to help you pick the right stocks The problem was that when firms like GS were putting the debt instruments together and selling it to customers, they were buying something that they wouldn’t have bought for themselves. Part of the dodd-franks act required firms to keep 10% of the securities that they sold To keep firms from selling you stuff that they wouldn’t hold on to themselves with the overall idea that they somehow be responsible for your investment decisions in a manner the a CFA might be responsible The question is should broker dealers have a fiduciary responsibility to retail companies like
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Unformatted text preview: CFAs have? What would society lose if we made the financial industry like a utility company? It is a question for wall street to answer Volcker rule - Commercial banks that are insured by the federal govt may not engage in proprietary trading for their own account London Whale Trade They bet largely for 4 years and made a lot Then lost a lot in the beginning of 2012 Inevitable effect of this on the financial industry configuration 2 important exceptions to the Volcker Rule Market making Pg. 167 Distinction btwn market making and proprietary trading MM- need to keep enough inventory to sell customers the product Genuine hedging Do they reduce the value at risk for the firm? Long term effect of the volcker rule is the migration of talent from banks to hedge funds...
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