Proposed Volcker Rule exception for community banks to publish Friday

A proposed rule to exclude banks under $10 billion in assets from the Volcker Rule prohibition against proprietary trading and ownership, or sponsorship, of hedge or private equity funds is slated for publication in the Federal Register Friday. Comments will be due in early March.

The proposal, issued by federal banking and securities regulators, specifically would exclude banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5% or less of total consolidated assets from the restrictions of the rule. It would also, under certain circumstances, permit a hedge fund or private equity fund to share the same name or a variation of the same name with an investment adviser that is not an insured depository institution, company that controls an insured depository institution, or bank holding company.

The measure, if finalized, would implement provisions of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), S. 2155). It was proposed jointly by the Federal Reserve Board, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC).

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