Treasury Secretary Timothy Geithner (R) speaks during a meeting of the Financial Stability Oversight Council with Federal Reserve Chair Ben Bernanke. Oct. 11, 2011. (Chip Somodevilla /Getty Images)

The government’s biggest financial heavyweights released a long-awaited version of the financial regulation known as the Volcker Rule, which may regulate “high-risk” trading more closely and lead to smaller Wall Street traders’ bonuses.

The Treasury Department, Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Securities Exchange Commission on Tuesday released the proposal in over  200 pages. The FDIC  allows the public to comment about the rule by Jan. 13.

The proposed Volcker rule, named after former Federal Reserve chairman Paul Volcker, is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law in July 2010. The rule prohibits two activities among insured depository institutions — any bank or credit union that is federally insured and accepts deposits, and that includes traditional banks as well as Goldman Sachs, Morgan Stanley, and American Express.

First, it prohibits those financial companies from engaging in “short-term proprietary trading of any security, derivatives and certain other financial instruments” from an entity’s own funds.   Second, it “prohibits owning, sponsoring, or having certain relationships with, a hedge fund or private equity fund.”

The rule would require banks to establish an “internal compliance program” and banks with “significant trading operations” to report federal agencies. The rule is subject to exemptions, which financial watch-dogs say are not stringent enough and banks say are too complex.

The Treasury said the rule details whether a nonbank financial company should be subject to “enhanced supervision” to prevent a future financial crisis. In the recent financial crisis, financial distress at certain nonbank financial companies contributed to “a broad seizing up of financial markets,” according to the council.

Under the proposed rule, traders’ bonuses could see a cut if they are paid based on revenue from fees, commissions, bid/ask spreads and not the appreciation or profit from their hedged positions.

Frank Keating, president of the American Bankers Association, said he feared the “complexity” of the rule will require bank employees whose sole jobs are to comply with the rule, further inhibiting “U.S. banks’ ability to serve customers and compete internationally. ”

Keating said regulators estimate banks will spend nearly 6.6 million hours to implement the rule, or which 1.8 million hours would be required every year.

“That translates into 3,292 years, or more than 3,000 bank employees whose sole job will be complying with this rule,” he said in a statement. “They will be transferred to a role that provides no customer service, generates zero revenue and does nothing for the economy. “