But the 920-page rule contains several exemptions that allow banks to continue proprietary trading in some instances. That raises questions about whether the government can completely limit extreme risk-taking in a complex financial world.
Congress instructed regulators to draft the Volcker Rule under the 2010 financial overhaul law. It was a high-priority proposal for President Barack Obama and named after Paul Volcker, a former Fed chairman who was an adviser to Obama during the financial crisis.
On Tuesday, Obama praised regulators for adopting a rule that ensures "big banks can't make risky bets with their customers' deposits."
Regulators won't begin enforcing the rule until 2015. The largest banks will be required to show next year how they are taking steps toward compliance.
The U.S. Chamber of Commerce on Tuesday said the rule could hurt Main Street businesses by making it harder for them to raise capital as banks' available cash is reduced. The business lobbying group hinted at a possible court challenge, saying it will "take all options into account as we decide how best to proceed."