Volcker Rule changes finally set to publish in Federal Register

A set of revisions to the Volcker Rule, which generally prohibits banking entities from engaging in proprietary trading or investing, are slated for publication in Thursday’s Federal Register.

The final rule was adopted in actions taken from August into October by five federal financial and securities industry regulators – the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) – with an effective date of Jan. 1, 2010. The compliance deadline is Jan. 1, 2021.

In a joint announcement last month, the agencies said firms that do not have significant trading activities will have simplified and streamlined compliance requirements under the final rule, while firms with significant trading activity will have more stringent compliance requirements.

They also noted that community banks generally are exempt from the Volcker rule by statute (in accordance with provisions of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, or EGRRCPA).

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.

Reg lookup: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds