How will latest changes to Volcker Rule affect non-US banks?

New York Law Journal

United States Publication September 2019

In her International Banking column in the New York Law Journal (subscription required), Kathleen A. Scott discusses the final Volcker Rule, focusing on some of the issues raised by non-US banks in their comments.

In her July 2018 column, she discussed proposed changes to the Volcker Rule regulations issued for comment by the federal banking, commodities and securities regulators (collectively, the Agencies). As most readers will know, the Volcker Rule (§13 of the Bank Holding Company (BHC) Act) and its implementing regulations (jointly with §13 of the BHC Act, the Volcker Rule) prohibit "banking entities" (generally, insured banks and their affiliates, and non-US banks with US banking operations) from engaging in proprietary trading or sponsoring or investing in private equity funds (covered funds).

In her January 2019 column, she discussed some comments on the proposal that had been submitted by non-US banks on issues of particular importance to them.

On Aug. 20, 2019, the Agencies' agreed-upon text of the final rule was released by the Federal Deposit Insurance Corporation (FDIC) when the FDIC board meeting voted to approve it. That same day, the Comptroller of the Currency (OCC) also signed off on the final rule text.

As of Sept. 5, 2019, the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission (together with the FDIC and OCC, the Agencies) had not yet approved the final rule.

This month's column will discuss the final rule, focusing on some of the issues raised by non-US banks in their comments (Commenters).

The final rule focuses mostly on the proprietary trading part of the Volcker Rule. Only those provisions in the covered funds part of the proposal that suggested specific language were finalized in the final rule. The Agencies noted in the commentary to the final rule that they intend this fall to issue a more detailed proposal on changes to the covered funds part of the Volcker Rule.

Read the full column.

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