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July 17, 2018

US Agencies (CFTC, FDIC, FED, OCC, and SEC) propose to amend the regulations implementing section 13 of the Bank Holding Company Act (BHC Act). Section 13 contains certain restrictions on the ability of a banking entity and non-bank financial company supervised by FED to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. The proposed amendments are intended to provide banking entities with clarity about the activities that are prohibited and to improve supervision and implementation of Section 13. Comments must be received by September 17, 2018.

US Agencies had issued the final rule implementing the provisions under Section 13 in December 2013. The Agencies believe that the proposed modifications to this 2013 rule would improve the ability of the US Agencies to examine for, and make supervisory assessments regarding, compliance relative to the statute and the implementing rules. The US Agencies also believe that the proposed changes would enable banking entities to implement appropriate risk management policies, in light of the risks associated with the activities in which banking entities are permitted to engage under section 13.

The Agencies also note that the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted on May 24, 2018, amends section 13 of the BHC Act by narrowing the definition of banking entity and revising the statutory provisions related to the naming of covered funds. They plan to address these statutory amendments through a separate rule making process; no changes have been proposed herein to implement these amendments. The statutory amendments took effect on enactment, however, and in the interim between enactment and the adoption of implementing regulations, the Agencies will not enforce the 2013 final rule in a manner inconsistent with the amendments to section 13 of the BHC Act with respect to institutions excluded by the statute and with respect to the naming restrictions for covered funds. Additionally, the specific regulatory amendments proposed herein would not be inconsistent with the recent statutory amendments to section 13 of the BHC Act.

 

Related Link: Proposed Rule

Comment Due Date: September 17, 2018

Keywords: Americas, US, Banking, Securities, BHC Act, EGRRCP Act, Volcker Rule, US Agencies

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