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

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    News

    US Agencies Propose Changes to Call Reports and Instructions

    Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.

    July 22, 2021 WebPage Regulatory News
    News

    PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker

    The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Examines Asset Encumbrance in Banking Sector

    The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Publishes Methodological Guide to Mystery Shopping

    The European Banking Authority (EBA) published a methodological guide to mystery shopping.

    July 21, 2021 WebPage Regulatory News
    News

    APRA Issues Update on Capital Reform Policy Settings for Banks

    The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.

    July 21, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Assess Continuity Planning of Market Infrastructures

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.

    July 21, 2021 WebPage Regulatory News
    News

    ESMA Responds to Proposal Related to Sustainability Standards Board

    The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.

    July 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7283