“Regulators are set to usher in a new era of tough banking oversight on Tuesday that drills to the core of Wall Street’s profitable markets and trading businesses, according to a draft of the rule reviewed by The Wall Street Journal.

“The so-called Volcker rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making, and will restrict compensation arrangements that encourage risky trading, according to the draft.

“Five U.S. financial regulatory agencies are expected to approve the rule, which bans banks from making bets with their own money and limits their ability to invest in certain trading vehicles, such as hedge funds and private-equity vehicles.

“The approval would bring to an end a 2½-year effort to complete the 2010 Dodd-Frank provision. The final language of the Volcker rule could change before Tuesday’s vote. Regulators have told firms that they don’t expect to strictly enforce the rule’s provisions until 2015.”

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