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Working Paper
Impact of the Volcker Rule on the Trading Revenue of Largest U.S. Trading Firms During the COVID-19 Crisis Period
Using a novel data collection, we examine the impact of the Volcker Rule on trading revenue of the 21 largest U.S. trading firms during the 100 day stress period centered on the COVID-19 financial crisis. We find that despite the market volatility, trading profits were consistent with volume-driven fees, commissions, and widening of the bid-ask spread. This work adds to the growing body of evidence that a consequence of the Volcker Rule on firm revenue associated with trading is increased financial stability and decreased risk exposure to market shocks.