Featured Product

    FED Proposes to Simplify Compliance Requirements for Volcker Rule

    May 30, 2018

    FED published the proposed rule to simplify and tailor compliance requirements related to the Volcker rule. By statute, the Volcker rule generally prohibits banking entities from engaging in proprietary trading and from owning or controlling hedge funds or private equity funds. Comment will be accepted for 60 days after publication of the proposal in the Federal Register.

    The proposed changes were jointly developed by the five agencies responsible for administration of the Volcker rule—CFTC, FDIC, FED, OCC, and SEC. Section 13 of the Bank Holding Company Act requires issuance of this rule jointly with the other four other agencies. Thus, publication of this preamble and proposed rule in the Federal Register will be delayed to allow all of the agencies to consider the proposal; the final version may differ from this version. As per this version of the rule, the 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
    • Provide more clarity by revising the definition of "trading account" in the rule, in part by relying on commonly used accounting definitions
    • Clarify that firms that trade within appropriately developed internal risk limits 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 Volcker rule on the foreign activity of foreign banks
    • Simplify the trading activity information that banking entities are required to provide to the agencies

    The recently enacted Economic Growth, Regulatory Reform, and Consumer Protection Act also made several changes to the statutory Volcker rule provisions. Among other things, the Act exempted community banks—firms with less than USD 10 billion in consolidated assets and with total trading assets and liabilities that are not more than 5% of total consolidated assets—from the Volcker rule restrictions. Formal implementation of the Volcker rule-related changes in the Act will occur in a separate rule making by the agencies. 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 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.

     

    Related Links

    Comment Due Date: FR + 60 Days

    Keywords: Americas, US, Banking, Volcker Rule, Proportionality, Compliance Requirements, Foreign Banks, FED

    Related Articles
    News

    FSB Sets Out Effective Practices for Cyber Incident Recovery

    FSB finalized the toolkit of effective practices to assist financial institutions in their cyber incident response and recovery activities.

    October 19, 2020 WebPage Regulatory News
    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

    BoE Publishes Reporting Schedule for Statistical Returns

    In a recent statistical notice, BoE announced publication of the reporting schedule for statistical returns for 2021.

    October 15, 2020 WebPage Regulatory News
    News

    EC Welcomes Declaration by Member States on EU Cloud Federation

    EC welcomed the joint declaration by 25 EU member states on building the next generation of cloud in Europe.

    October 15, 2020 WebPage Regulatory News
    News

    MAS Amends Notice on Issuance of Covered Bonds by Banks in Singapore

    MAS published amendments to Notice 648 on the issuance of covered bonds by banks incorporated in Singapore.

    October 15, 2020 WebPage Regulatory News
    News

    FDIC Selects Technology Companies for Rapid Prototyping Competition

    FDIC has selected 14 technology companies—including Accenture Federal Services, LLC, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the next phase of the rapid prototyping competition.

    October 15, 2020 WebPage Regulatory News
    News

    GLEIF Defines New Validation Agent Role for Financial Institutions

    GLEIF announced that financial institutions worldwide can realize a variety of cost, efficiency, and customer experience benefits by assuming a new “validation agent” role within the Global Legal Entity Identifier (LEI) System.

    October 15, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5979