April 2, 2020

Agencies to Consider Delayed Comments on Proposed Volcker Rule Amendments

The Federal Reserve Board ("FRB"), FDIC, OCC, SEC and CFTC stated that they will consider comments submitted past the original deadline on a proposal to amend the Volcker Rule's "covered funds" provisions. In the Joint Release, the agencies stated they "will continue to consider comments 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 for comments was April 1, 2020. The agencies stated they will continue to review all comments submitted before May 1, 2020.

As previously covered, the Volcker Rule (i.e., Section 619 of Dodd-Frank) would be revised to clarify certain covered funds provisions by:

  • simplifying existing provisions of the rule related to foreign public funds, loan securitizations, and small business investment companies;

  • permitting banking entities to invest in or sponsor certain types of funds which do not raise the concerns that the Volcker Rule was intended to address, such as credit funds, venture capital funds, customer facilitation funds, and family wealth management vehicles;

  • limiting the extraterritorial impact of the rule on foreign funds offered by foreign banks to foreign individuals;

  • stating that the so-called "Super 23A" provisions of the Volcker Rule would not prohibit certain low-risk transactions (including intraday credit and payment, clearing, and settlement transactions) between a banking entity and covered funds for which the banking entity serves as investment adviser or sponsor;

  • affirming that credit exposure to a covered fund generally would not constitute ownership interests under the Volcker Rule; and

  • outlining the treatment of parallel direct investments made by a banking entity in the same underlying investments as sponsored covered funds are not deemed to be investments in the fund itself.

Comments already submitted on the proposal can be viewed on the FRB, FDIC, OCC, SEC and CFTC websites.

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