The top supervisory official at the Federal Reserve Board Thursday said he expects the central bank will have new proposals out early this fall on changes in Volcker Rule limits on proprietary trading and covered funds.
Randal Quarles, the Fed’s vice chairman for supervision, said during a Q&A session at a conference of the Bipartisan Policy Center that the new proposal would address many of the comments received on proposed changes on proprietary trading and that the Fed would, at the same time, issue a proposal on covered funds (about which last year’s proposal only posed questions).
Quarles added he expects the fall release to provide a “conclusion on the proprietary trading piece.”
The Fed and four other financial regulators issued a proposal last summer to tailor Volcker Rule requirements for three tiers of firms based on trading activity level. The proposal, briefly, offered firms with less than $1 billion of consolidated gross trading assets and liabilities a rebuttable presumption of compliance with the rule. This group reportedly represents about 98% of total U.S. trading activity by banking entities.
The proposal was issued jointly by the Fed Board, the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corp. (FDIC), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC).
Separately last week, the agencies jointly issued a final rule excluding from Volcker Rule requirements community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5% or less of total consolidated assets. The provision was approved under last year’s Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155).
RR: Final rule excludes community banks from Volcker Rule, agencies announce (July 9, 2019)