Bruno Iksil, a London-based trader for JPMorgan Chase, single-handedly moved the derivatives market last week by making huge bets on corporate bonds, panicking other hedge fund managers who took to calling him “Voldemort” for his power over Wall Street.

(Simon Dawson/Bloomberg)

The rationale behind the regulation is that banks that receive government guarantees shouldn’t be gambling with money simply to make a profit for themselves, rather than help their clients. The new rules are meant to make markets more stable and bailouts less likely. Now JPMorgan’s Voldemort — also dubbed “the London Whale” by other traders — has shown how “a big bank can become the market. JPMorgan’s big position now makes trading in these credit indexes less likely, not more, which could lead to more volatile markets,” explains ProPublica’s Jesse Eisinger.

JPMorgan, for its part, defends the controversial trades as legitimate hedging, and CNBC’s John Carney explains why this might actually be the case. In fact, the difficulty in distinguishing between illegal prop trading and legitimate hedging has been the biggest holdup for the Volcker Rule, which regulators are still struggling to puzzle out. And JPMorgan’s Voldemort should be a good test case for how strong-armed the crackdown on Wall Street really will be.