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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Financial Institution Letters

FIL-31-2018
June 4, 2018

Volcker Rule: Prohibitions on Proprietary Trading and Certain Relationships with Hedge Funds or Private Equity Funds

Printable Format:

FIL-31-2018 - PDF (PDF Help)

Summary:

The Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, Securities and Exchange Commission, and Commodity Futures Trading Commission (collectively, the Agencies) have requested comment on a proposal that would amend the Volcker Rule to provide banking entities with clarity about what activities are prohibited, improve supervision and implementation of the Rule, and simplify compliance.

Statement of Applicability to Institutions with Total Assets Under $1 Billion: This Financial Institution Letter (FIL) is applicable to all FDIC-insured depository institutions (IDIs) that have, or are controlled by a company that has, $10 billion or more in total consolidated assets or total trading assets and trading liabilities that are more than 5 percent of total consolidated assets. An addendum is included that describes the legislative changes to the Volcker Rule from the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Highlights:

The Proposal would:

Continuation of FIL-31-2018

Distribution:

Suggested Routing:

Related Topics:

Attachments:

Contact:

Note:

FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's website at www.fdic.gov/news/news/financial/2018/.

To receive FILs electronically, please visit www.fdic.gov/about/subscriptions/fil.html.

Paper copies may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Financial Institution Letters
FIL-31-2018
June 4, 2018

The Volcker Rule and the Economic Growth, Regulatory Relief, and Consumer Protection Act

The President signed the "Economic Growth, Regulatory Relief, and Consumer Protection Act" (the "Act") into law on May 24, 2018. Sections 203 and 204 of the Act amends section 13 of the Bank Holding Company Act ("BHC Act"), commonly known as the Volcker Rule. These provisions of the Act are effective immediately.

Section 203 exempts any institution from the definition of a banking entity that "does not have and is not controlled by a company that has (i) more than $10,000,000,000 in total consolidated assets; and (ii) total trading assets and trading liabilities as reported on the most recent applicable regulatory filing filed by the institution, that are more than 5 percent of total consolidated assets." Any institution that meets these requirements is exempt from the Volcker Rule.

Section 204 of the Act provides that a "hedge fund or private equity fund may share the same name or a variation of the same name as a banking entity that is an investment adviser to the hedge fund or private equity fund, if (1) such investment adviser is not an insured depository institution, a company that controls an insured depository institution, or a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978; (2) such investment adviser does not share the same name or a variation of the same name as an insured depository institution, any company that controls an insured depository institution, or any company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978; and (3) such name does not contain the word 'bank'."

The Agencies will enforce the 2013 final rule in a manner that is consistent with the amendments to section 13 of the BHC Act with respect to institutions excluded by the statute and with respect to the naming restrictions for covered funds. The Agencies plan to address these statutory amendments outside of the current notice of proposed rulemaking.

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