On June 25th, five federal agencies including the SEC finalized changes related to the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds. These funds are typically known as covered funds. Generally the Volcker rule prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with covered funds.
The new rule modifies three areas of the Volcker rule as follows:
- Streamlining the covered funds portion of rule
- Addressing the extraterritorial treatment of certain foreign funds
- Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address
The final rule is broadly similar to the proposed rule from January and will go into effect October 1st. For more information, interested parties can contact the agencies as listed below:
| Commodities Futures Trading Commission |
Office of Public Affairs |
(202) 418-5080 |
| Federal Reserve |
Eric Kollig |
(202) 452-2955 |
| Federal Deposit Insurance Corporation |
Brian Sullivan |
(202) 898-6992 |
| Office of the Comptroller of Currency |
Bryan Hubbard |
(202) 649-6870 |
| Securities and Exchange Commission |
Office of Public Affairs |
(202) 551-4120 |
Sources:
Financial Regulators Modify Volcker Rule (www.sec.gov)
Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds (www.sec.gov)
