On June 25, financial regulatory agencies modified the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds, known as covered funds. The final rule permits banking entities to offer financial services and engage in other activities that fall outside of the issues that the rule was intended to address, and it streamlines the covered funds portion of the rule. The rule will be effective as of October 1. Release. Final Rule.
On August 2, 2017, the Office of the Comptroller of the Currency (“OCC“) issued a public notice that it is seeking public input on revising the final regulation implementing section 619 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (commonly known as the Volcker Rule).
The Notice, to be published in the Federal Register, solicits public input on whether certain aspects of the implementing regulation should be revised to better accomplish the purposes of section 619 while decreasing the compliance burden on banking entities and fostering economic growth. In particular, the OCC invites input on ways to tailor the rule’s requirements and clarify key provisions that define prohibited and permissible activities. The agency also seeks input on how the federal regulatory agencies could implement the existing rule more effectively without revising the regulation. The OCC noted that: “This is one piece of a larger interagency effort to improve the rule.”
The OCC requests that respondents provide any comments within 45 days of publication in the Federal Register. Release.
On July 24, 2017, the Federal Reserve Board “announced guidelines for banking entities seeking an extension to conform certain ‘seeding’ investments in hedge funds or private equity funds (‘covered funds‘) to the requirements of … the Volcker Rule.” In part, the new guidelines require further detail regarding “the reasons for the extension and an explanation of the entity’s plan to conform the investment to the requirements of” the Volcker Rule. Press Release.
On July 21, 2017, the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of Comptroller of the Currency and the Securities and Exchange Commission announced they would work together as they reviewed the impact of the Volcker Rule on specific types of foreign funds. Federal Reserve Press Release. FDIC Press Release. OCC Press Release. SEC Press Release.
