Dodd-Frank News Center

Fed extends 'Volcker Rule' information collection

This story appeared in Bank Digest.                                   

The Federal Reserve Board is adopting a proposal to extend for three years, without revision, an existing information collection entitled "Reporting, Recordkeeping, and Disclosure Requirements Associated with Proprietary Trading and Certain Interests in and Relationships with Covered Funds (Regulation VV)."                                   

This collection concerns Section 13 of the Bank Holding Company Act of 1956, commonly known as the Volcker Rule, which contains certain prohibitions and restrictions on the ability of a banking entity supervised by certain federal agencies to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund.                                 

On Aug. 2, 2017, the Fed published a notice (see 2017 No. 2655) in 82 Federal Register 35947 requesting public comment for 60 days on the proposal. The Fed did not receive any comments, and the information collection will be extended as proposed.

House passes bills opposing Operation Choke Point, amending Volcker rule

This story appeared in Bank Digest. 

The House of Representatives has passed the Financial Institution Customer Protection Act of 2017 (H.R. 2706), sponsored by Rep. Blaine Luetkemeyer (R-Mo), and the Investor Clarity and Bank Parity Act (H.R. 3093), which was sponsored by Rep. Mike Capuano (D-Mass). H.R. 2706, which passed by a vote of 395 to 2, requires federal banking agencies to provide banks or credit unions written justification of any request to terminate or restrict a customer’s account, except in instances of national security, according to a House Financial Services Committee press release. The bill was introduced in response to a former Justice Department and Federal Deposit Insurance Corporation initiative called “Operation Choke Point.” 

H.R. 3093, which passed the House by voice vote, amends the Dodd-Frank Act’s Volcker rule so that a hedge fund or private equity fund could share a name with a bank-affiliated investment adviser that manages the fund.

OCC seeks public's input on Volcker Rule clarification and recalibration

This story appeared in Bank Digest.                                  

The Office of the Comptroller of the Currency is seeking comment on how to revise its final rule implementing the Volcker Rule, but the agency stressed that it was not seeking changes to the underlying Volcker Rule statute. The agency is also seeking comment on how the existing rule could be implemented more effectively.                                  

The OCC is seeking comments on four broad areas: (1) the scope of entities to which the final rule applies; (2) the proprietary trading restrictions; (3) the covered fund restrictions; and (4) the compliance program and metrics reporting requirements.                                  

Comments must be received within 45 days from publication of the OCC's notice in the Federal Register. Any comments submitted to the OCC must provide information and "data" describing with specificity any burdens or inefficiencies resulting from the current rule and explaining how particular revisions would alleviate those burdens or inefficiencies.

 

Fed proposes extension of 'Volcker Rule' information collection

This story appeared in Bank Digest.                                  

The Federal Reserve Board is requesting comment on a proposal to extend for three years, without revision, an existing information collection entitled "Reporting, Recordkeeping, and Disclosure Requirements Associated with Proprietary Trading and Certain Interests in and Relationships with Covered Funds (Regulation VV)."                                   

This collection concerns Section 13 of the Bank Holding Company Act of 1956, commonly known as the Volcker Rule, which contains certain prohibitions and restrictions on the ability of a banking entity supervised by certain federal agencies to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. Comments must be submitted by Oct. 2, 2017.

Volcker Rule enforcement halted for one year for qualifying foreign excluded funds

This story appeared in Bank Digest. 

Five federal financial regulatory agencies have announced that they will not take action under the Volcker Rule for qualifying foreign excluded funds for a period of one year while they review Volcker Rule regulations to ensure that excluded funds do not become subject to the rule. The agencies are the Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Commodity Futures Trading Commission. 

In their joint press release, the agencies explained that complexities in Section 619 of the Dodd-Frank Act and its implementing regulations may result in certain foreign excluded funds becoming subject to regulation because of governance arrangements with or investments by a foreign bank. As a result, a number of foreign banking entities, foreign government officials, and other market participants have expressed concern about possible unintended consequences and extraterritorial impact.

Fed provides information on seeking Volcker Rule extension for 'illiquid funds'

This story appeared in Bank Digest.

The Federal Reserve Board has announced additional details regarding how banking entities may seek an extension to conform their investments in a narrow class of funds that qualify as "illiquid funds" to the requirements of section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule. According to a press release, the Fed expects that the illiquid funds of banking entities will generally qualify for extensions, though extensions may not be granted in certain cases--for example, where the banking entity has not demonstrated meaningful progress to conform or divest its illiquid funds, has a deficient compliance program under the Volcker Rule, or where the Fed has concerns about evasion. In a statement of policy, the Fed outlined a simplified and streamlined process for granting extensions of the holding period for illiquid funds. The Fed reiterated the process in SR 16-18.

Merkley objects to delayed implementation of Volcker Rule

This story appeared in Bank Digest.

Senator Jeff Merkley (D-Ore) has issued a statement regarding the Federal Reserve Board's announcement that it would delay implementation of a key part of the Volcker Rule until 2017. Section 619 of the Dodd-Frank Act generally prohibits banking entities from engaging in proprietary trading and from holding interests in, sponsoring, or maintaining some other relationships with hedge or private equity funds--a provision commonly called the Volcker Rule.

The Fed recently granted the final permitted broad-based extension of the deadline by which covered institutions must come into full compliance with these restrictions. According to Merkley, "It's time for our regulators to stop carving out loopholes from the Volcker Rule and instead draw clear, bright lines that protect our economy and separate hedge fund activities from traditional banking."

Fed extends Volcker Rule conformance period for last time

This story appeared in Bank Digest.

The Federal Reserve Board has granted the final permitted broad-based extension of the deadline by which banking entities must bring their trading activities and hedge and private equity fund activities into conformity with the restrictions imposed by the Dodd-Frank Act. Section 619 of the act generally prohibits banking entities from engaging in proprietary trading and from holding interests in, sponsoring, or maintaining some other relationships with hedge or private equity funds--a provision commonly called the Volcker Rule.

The newest extension is the third, and final, extension the Fed can allow, and it gives covered institutions until July 21, 2017, to come into full compliance. However, the Fed's release emphasized that the extension applies only to investments in prohibited hedge or private equity funds before Dec. 31, 2013, which are referred to as legacy covered fund investments. There is no extension for proprietary investment activities or investments made after Dec. 31, 2013. The full-compliance deadline for these investments was Dec. 31, 2015, the end of the first one-year extension.

Volcker Rule FAQs updated

This story appeared in Bank Digest.

The Federal Reserve Board has updated its Frequently Asked Questions regarding the application of section 13 of the Bank Holding Company Act of 1956, commonly referred to as the Volcker Rule, and regulations adopted by the Fed, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission. The Fed noted that while the FAQs apply to banking entities for which the Fed has jurisdiction under section 13 of the BHC Act, they have been developed by staffs of all five agencies.

The latest updates, FAQ Nos. 19 and 20, discuss the treatment of residual market-making positions upon the termination of market-making activity and the applicability of the restrictions in Section 13(f) of the Bank Holding Company Act.

Volcker Rule FAQs updated

This story appeared in Bank Digest.

The Federal Reserve Board has updated its Frequently Asked Questions regarding the application of section 13 of the Bank Holding Company Act of 1956, commonly referred to as the Volcker Rule, and regulations adopted by the Fed, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission. The Fed noted that while the FAQs apply to banking entities for which the Fed has jurisdiction under section 13 of the BHC Act, they have been developed by staffs of all five agencies.

The latest updates, FAQ Nos. 17 and 18, discuss the application of the Volcker Rule to compliance for market making and the identification of covered funds and to CEO certification for prime brokerage transactions.