The U.S. Federal Reserve and other financial regulators on Wednesday announced a proposal to loosen the so-called Volcker rule, which prohibits banking entities from engaging in proprietary trading.

"Since regulations implementing the Volcker rule were finalized in December 2013 by five federal agencies, experience has shown that the complexity of the rule has created compliance uncertainty for firms subject to the rule," the Fed said in a statement.

The central bank said the proposed changes are intended to "streamline the rule by eliminating or modifying requirements that are not necessary to effectively implement the statute," without diminishing the safety and soundness of banking entities.

Those proposed changes were jointly developed by the Fed, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

One of the key proposed changes would tailor the rule's compliance requirements based on the size of a firm's trading assets and liabilities, with the most stringent requirements applied to firms with the most trading activity, according to the Fed.

"The proposal will address some of the uncertainty and complexity that now make it difficult for firms to know how best to comply, and for supervisors to know that they are in compliance," Fed Chairman Jerome Powell said in a statement.

The rule, named for former Fed Chairman Paul Volcker, was adopted after the 2008 global financial crisis. It was a key plank of the landmark Dodd-Frank Act passed by U.S. Congress in 2010 to prevent another financial meltdown.

But the Trump administration has made deregulation a key part of his financial agenda and repeatedly blamed the Dodd-Frank Act for stifling economic growth.

The Wall Street has also long lobbied to relax trading restrictions imposed by the Volcker Rule. With those proposed changes, U.S. large banks would have more freedom to conduct short-term trading.