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Wall Street Claim That Rules Imperil Trading Is Undercut by SEC

The impact of regulations like Dodd-Frank on liquidity is unclear, SEC economists say.

Securities and Exchange Commission economists are throwing cold water on Wall Street’s persistent complaints that post-crisis regulations have made markets more susceptible to shocks.

The market dynamics of recent years weren’t necessarily caused by stricter rules imposed by U.S. and international regulators after the 2008 financial meltdown, the SEC’s Division of Economic and Risk Analysis said in a 300-plus page report to lawmakers released Tuesday. The report examines the extent to which measures such as the Volcker Rule and capital requirements associated with Basel III have affected a range of asset classes, including equities, government and corporate bonds as well as derivatives.

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