Agencies finalize revisions to ‘Volcker rule’; compliance set for Jan. 1, 2021

Final revisions to the “Volcker rule” – which prohibits banking entities from engaging in proprietary trading or investing — were announced Tuesday by the three federal banking agencies and the two federal agencies that regulate securities trading.

In a joint release, the Federal Deposit Insurance Corp., Federal Reserve, Commodity Futures Trading Commission (CFTC), Office of the Comptroller of the Currency (OCC) and the Securities and Exchange Commission (SEC) announced the revisions.

The revisions take effect Jan. 1; compliance date is one year later (Jan. 1, 2021).

In a release, the agencies said that, under the revisions, firms that do not have significant trading activities will have simplified and streamlined compliance requirements, while firms with significant trading activity will have more stringent compliance requirements.

Community banks, the agencies noted, generally are exempt from the Volcker rule by statute.

The revisions continue to prohibit proprietary trading, while providing greater clarity and certainty for activities allowed under the law, the agencies asserted. “With the changes, the agencies expect that the universe of trades that are considered prohibited proprietary trading will remain generally the same as under the agencies’ 2013 rule,” the agencies said.

Agencies finalize changes to simplify Volcker rule