in the US the implementation of the Volcker rule has been delayed as a result and when implemented the supervisors will have to rely on tedious transaction-by-transaction supervision. –  In its pure form, market making is not about taking open positions and the price spreads given re very narrow.
Only when things do not go as planned inventory is building up and this is when we get closer to the territory of proprietary trading. –  At the level of the trading floor, it is relatively easy to distinguish the proprietary trading and market making. –  However, things can also be hidden if so desired, hence making the supervision potentially very difficult.