Featured Product

    FDIC and OCC Approve Interagency Rule to Simplify Volcker Rule

    August 20, 2019

    FDIC and OCC approved the final rule to simplify and tailor requirements under the Volcker Rule. The Volcker Rule generally prohibits banking entities from engaging in proprietary trading and from owning or controlling hedge funds or private equity funds. The final rule will be published in the Federal Register following consideration and approval of all of the participating agencies. The final rule will have an effective date of January 01, 2020 and a compliance date of January 01, 2021. However, a banking entity may voluntarily comply, in whole or in part, with the changes to the rule prior to January 01, 2021. FDIC also published statement by Chairman Jelena McWilliams and a fact sheet on amendments to the Volcker Rule.

    US Agencies (CFTC, FDIC, FED, OCC, and SEC) published, in July 2018, a proposal to simplify the 2013 rule by providing more certainty for banking entities and tailoring requirements to reflect the size and scope of the trading activities of a banking entity. The final rule will:

    • Tailor the compliance requirements based on the size of a firm's trading assets and liabilities, with the most stringent requirements applied to banking entities with the most trading activity
    • Retain the short-term intent prong of the "trading account" definition from the 2013 rule only for banking entities that are not, and do not elect to become, subject to the market risk capital rule prong
    • Replace the rebuttable presumption that instruments held for fewer than 60 days are covered under the short-term intent prong with a rebuttable presumption that instruments held for 60 days or longer are not covered
    • Clarify that banking entities that trade within internal risk limits set under the conditions in this final rule are engaged in permissible market making or underwriting activity
    • Streamline the criteria that apply when a banking entity seeks to rely on the hedging exemption from the proprietary trading prohibition
    • Limit the impact of the rule on the foreign activities of foreign banking organizations
    • Simplify the trading activity information that banking entities are required to provide to the agencies

    The final rule includes the following three-tiers for tailoring the compliance program requirements:

    • Banking entities with total consolidated trading assets and liabilities of at least USD 20 billion would be considered to have “significant” trading assets and liabilities. Banking entities with significant trading assets and liabilities would be subject to a six-pillar compliance program, annual CEO attestation, and metrics requirements.
    • Banking entities with total consolidated trading assets and liabilities between USD 1 billion and USD 20 billion would be considered to have “moderate” trading assets and liabilities. Banking entities with moderate trading assets and liabilities would be subject to a simplified compliance program.
    • Banking entities with total consolidated trading assets and liabilities of less than USD 1 billion would be considered to have “limited” trading assets and liabilities. Banking entities with limited trading assets and liabilities would be subject to a presumption of compliance.

    The final rule would modify the metrics collection requirements to, among other things, eliminate certain metrics and reduce the compliance burdens associated with the remaining metrics requirements. Metrics filers must submit metrics on a quarterly basis with a reporting schedule of 30 days after the end of each quarter.


    Related Links

    Effective Date: January 01, 2020

    Keywords: Americas, US, Banking, Volcker Rule, Dodd-Frank Act, Proportionality, Compliance Requirements, EGRRCP Act, Reporting, Market Risk, US Agencies

    Featured Experts
    Related Articles
    News

    HKMA Urges Early Action for Adherence to IBOR Fallbacks Protocol

    HKMA urged authorized institutions to take early action to adhere to the IBOR Fallbacks Protocol, which ISDA is expected to publish soon.

    October 16, 2020 WebPage Regulatory News
    News

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR).

    October 16, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on BRRD2 Transposition

    HM Treasury published a document that summarizes the responses received from a consultation on the approach of UK to transposition of the revised Bank Resolution and Recovery Directive (BRRD2).

    October 15, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Response to Proposal on CRD5 Transposition

    HM Treasury published the government response to the feedback received on the consultation for updating the prudential regime of UK before the end of the Brexit transition period.

    October 15, 2020 WebPage Regulatory News
    News

    PRA Updates Supervisory Statement on Counterparty Credit Risk

    PRA published the final policy statement PS22/20, which contains the updated supervisory statement SS12/13 on counterparty credit risk.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Update on Work to Address Market Fragmentation

    FSB published an update on its work to address market fragmentation. FSB is working in this area in collaboration with the other standard-setting bodies.

    October 14, 2020 WebPage Regulatory News
    News

    EBA Proposes to Revise Guidelines on Incident Reporting Under PSD2

    EBA proposed revisions to the guidelines on major incident reporting under the second Payment Service Directive (PSD2).

    October 14, 2020 WebPage Regulatory News
    News

    EBA Finalizes Standards for Prudential Treatment of Software Assets

    EBA published the final draft regulatory technical standards specifying the methodology for prudential treatment of software assets by banks.

    October 14, 2020 WebPage Regulatory News
    News

    FSB Publishes Roadmap on Cross-Border Payments, Report on Stablecoins

    FSB published a report presenting the roadmap to enhance cross-border payments by providing a high-level plan that sets ambitious but achievable goals and milestones in the five focus areas.

    October 13, 2020 WebPage Regulatory News
    News

    EIOPA Urges Insurers to Prepare for End of Brexit Transition

    In a recent communication, EIOPA urged the insurance sector to complete its preparations for the end of the Brexit transition period on December 31, 2020.

    October 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5959