Skip to main content
Menu Icon

InfoBytes Blog

Financial Services Law Insights and Observations

Agencies to modify Volcker Rule’s “covered funds” requirements

Agency Rule-Making & Guidance FDIC Federal Reserve CFTC OCC SEC Bank Holding Company Act Of Interest to Non-US Persons

Agency Rule-Making & Guidance

On January 30, the OCC, Federal Reserve Board, FDIC, SEC, and CFTC issued a notice of proposed rulemaking to modify and streamline the “covered funds” requirements under Section 13 of the Bank Holding Company Act, commonly known as the Volcker Rule (Rule). As previously covered by InfoBytes, last fall the regulators signed off on final revisions to the Rule to simplify and tailor its restrictions on a banking entity’s ability to engage in proprietary trading and own certain funds. Specifically, the proposed amendments would modify the restrictions for banking entities investing in, sponsoring, or having certain relationships with covered funds, including simplifying provisions related to foreign public funds, loan securitizations, and small business investment companies. The amendments would also, among other things, (i) limit the extraterritorial impact of the Rule on certain foreign funds offered by foreign banks to foreign investors; (ii) modify and propose several existing exclusions to allow banking entities to invest in or sponsor certain types of funds—subject to certain safeguards—such as credit funds, venture capital funds, family wealth management vehicles, and customer facilitation funds; and (iii) permit intraday extensions of credit, payment, clearing, and settlement transactions between a banking entity and covered funds the banking entity advises or sponsors, or with which the banking entity has certain other relationships. Comments will be accepted through April 1.