The first set of exemptions revolves around market making, in which banks take positions in markets by purchasing, holding and selling financial instruments in anticipation of the needs of their customers.
(Read more: Cramer: Volcker Rule probably bullish for banks.)
There are some who believe that even market making is too risky for banks. Why can't banks just wait for customer orders before buying a security?
This would allegedly lead to less liquid markets, slower processing of customer trades, and poorer pricing. Your local grocery store, for example, doesn't buy, say, winter squash based on actual customer orders—it buys inventory in advance of customer demand so it can have squash on hand when a customer wants it. Wall Street firms want to do the same thing with bonds and other securities.
The great concern is over how to judge whether a bank is purchasing a security as part of a proprietary trading strategy or a market making strategy.
Both kinds of trades look very much alike. A bank uses its own capital to make the trades, which means it takes on risk from holding the position. In either case, it can profit when the market moves in one direction and lose money if it moves in the other.
In the rules released Tuesday, regulators sought to distinguish between the two types of trading through the lens of history and vague "market factors." Banks will be required to engage in analysis that shows trading is aimed at meeting "historical customer demand."
(Read more: What you need toknow about the Volcker Rule)
Trading will only be permitted if a "firm's trading desk's inventory in these types of financial instruments is designed not to exceed, on an ongoing basis, the reasonably expected near-term demands of customers," according to the official summary of the rules released Tuesday.
This means that there's no bright line for banks or regulators to follow. What counts as permitted trading will depend on the type of financial instrument, historical data, and market conditions.
That's a lot of room for judgment—or funny business—on the part of banks, regulators or both. But, mostly, it's what market-making desks were largely doing in the first place.
This may put a lot of pressure on another aspect of the rule—the limit on compensation. The Volcker Rule seeks to prohibit banks from paying traders for undertaking proprietary trading strategies by saying that compensation schemes should be risk-adjusted and focused on meeting customer demand rather than just a trading desk's profit and loss.
This may seem like a bigger change than it is.
(Read more: For BofA, billions more in legal costs from crisis)
The big Wall Street firms were already mostly paying market making desks on a risk adjusted basis. The rule is mostly codifying current practice. And it still depends, crucially, on a bank's ability to properly assess the risks its trading desks are taking on.
In other words, it appears that the Volcker Rule mostly succeeds when it comes to letting banks engage in market making.