This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Volcker Rule Will Benefit These Firms: KBW

Stocks in this article: JPMBXFIGKKRICE

NEW YORK ( TheStreet) -- The intense regulatory focus on "Too Big to Fail" banks should continue to create opportunities for smaller players and non-banks, according to KBW analysts.

"The implementation of the Volcker rule is likely to be tougher than was thought just a few months ago, the push to move derivatives to exchanges will accelerate, and the continued implementation of higher capital standards for large banks will move merchant banking activities to non-banks, in our view," the analysts said.

The argument to break up big banks has been gaining favor in Washington amid concerns of an ongoing perception in the market of an implied government guarantee for the nation's largest lenders. Trading losses at JPMorgan Chase (JPM) amid regulatory and risk-management lapses have also raised concerns that some firms may be "too big to manage" and "too big to regulate."

That has stepped up regulatory pressure to toughen the Volcker rule, which is intended to limit risk by banning banks from proprietary trading and moving derivatives trading to exchanges. The Volcker Rule is meant to contain damage to the wider financial system from a trading firm's failure.

While the analysts do not believe there will be new legislation to break up the banks, they expect the largest banks, particularly those designated to be globally significant, to be in for a "long period of increased regulation, limited profitability and shrinkage."

Increased regulation has, however, created opportunities for smaller firms, the analysts note. The regulation and litigation surrounding mortgages, for instance, has allowed companies such as Ocwen Financial (OCN) to grow market share. Similarly, implementation of consumer banking laws in through the Dodd-Frank bank reform legislation has been cumbersome for the large banks, but has allowed lenders such as Discover Financial Services (DFS)and Signature Bank (SBNY) to gain market share.

In the capital markets space, KBW expects alternative managers such as Blackstone (BX), Carlyle Group (CG), Fortress Investment Group (FIG) and private equity firm KKR (KKR), to benefit in the new regulatory landscape. Exchanges such as Intercontinental Exchange (ICE) and brokers Evercore Partners (EVR) and Raymond James Financial (RJF) are also likely to emerge as winners.

-- Written by Shanthi Bharatwaj New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,803.85 -11.09 -0.06%
S&P 500 2,069.41 +2.38 0.12%
NASDAQ 4,773.8730 +15.6210 0.33%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs