U.S. regulators do not yet know enough about Wall Street's proprietary trading to effectively police it, according to a government report released on Wednesday.
Critics have questioned whether the ban is necessary, saying proprietary trading did not fuel the financial crisis.
They also say an ill-written ban could restrain banks' market making that is necessary to keep markets liquid.
The GAO report could give fuel to the reform's critics because it lays out the difficulty of identifying true proprietary trading and also says the practice is not a big money maker for Wall Street.
``Compared to these firms' overall revenues, their stand-alone proprietary trading generally produced small revenues in most quarters and some larger losses during the financial crisis,'' the study said.
The report looked at proprietary trading between June 2006 and December 2010.
In 13 quarters during this period, stand-alone proprietary trading produced revenues of $15.6 billion -- 3.1 percent or less of the firms' combined quarterly revenues from all activities. In five quarters during the financial crisis, these firms lost a combined $15.8 billion from the activity.
GAO also said regulators will have a tough time distinguishing proprietary trading.
``While the act's restrictions reduce the scope of activities regulators must monitor, implementing them poses challenges, including how to best ensure that firms do not take prohibited proprietary positions while conducting their permitted customer-trading activities,'' the report said.
Given the sensitivity over the issue, GAO's conclusions drew a quick rebuke from supporters of the ban, who called the report incomplete and misleading.
``GAO missed this opportunity to help shine more light on the high-risk gambles that decimated millions of families and businesses and nearly destroyed our financial system,'' Democratic Senators Carl Levin and Jeff Merkley said in a release.
The GAO, Congress' non-partisan investigative office, said that it looked only at proprietary trading at desks specifically established to engage in these activities because it was not ``feasible'' to examine this type of trading elsewhere because of how banks keep their records.
Levin and Merkley said GAO should have looked harder. They said their offices tried to help the agency on how it could examine proprietary trading across banks' business activities.
``The report reminds us of the story of a man who dropped his keys at night and then began looking for them under a nearby parking lot light, not because he dropped them there but because that was where the light was,'' Levin and Merkley said.
Regulators must issue final regulations on the Volcker rule by October. An initial proposal is expected to be released over the summer.