Separating investment and trading desks for Volcker is a compliance nightmare for banks, says lawyer

The separation of investment and trading desks for the purposes of the Dodd-Frank Act's much dreaded "Volcker Rule" is creating a compliance nightmare for foreign banking organisations (FBOs), said a U.S. lawyer in Hong Kong. Moving forward, chief investment officers at foreign banks would have to evidence their intentions to U.S. regulators, said Jeffrey Chen, a partner with law firm Cadawalader, Wickersham & Taft in Hong Kong. Chen was speaking during a presentation on Tuesday at the University of Hong Kong (HKU). "What all banking entities will have to do is have a compliance programme … the easiest thing to do is separate their proprietary trading into a different desk to show regulators that they are compliant. You want to be able to show that 'this is my investment desk and what they do is non-proprietary trading' and 'this is my trading desk, where we have some proprietary trading'," he said. Chen said that banks had to show that every investment and trade from their investment