A proposal to modify the Volcker rule’s general prohibition on banking entities investing in or sponsoring “covered funds” will continue to be open to comment until May 1; Wednesday was the previous deadline.
In a joint release, federal banking and securities regulators said they extended the comment period – opened in late January – on their proposal to loosen rules on investments in venture capital funds by banks to “provide interested persons more time to analyze the issues and prepare their comments in light of potential disruptions resulting from the coronavirus.”
The deadline extension was announced by the Federal Deposit Insurance Corp. (FDIC), the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC). “Covered funds” in the proposal refers to hedge funds or private equity funds.
Under the proposal – referred to as the “Volcker rule covered funds proposal” (or covered funds, for short) – banks could invest more capital in funds they already offer clients as long as the funds invest in startups and small businesses. It would remove a 3% limit on the investment banks can make in venture funds that they offer to their clients and customers. However, limits on investments in hedge funds and private equity funds remain in place.
Agencies will consider comments on Volcker rule modifications following expiration of comment period