Agencies Adopt Amendments to Volcker Rule's "Covered Funds" Provisions

The Federal Reserve Board, FDIC, OCC, SEC and CFTC (the "Banking Agencies") adopted amendments to the Volcker Rule "covered funds" provisions. The final rule will go into effect on October 1, 2020.

As previously covered, the amendments are aimed at refining certain aspects of the Volcker Rule regarding 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 that do not raise the concerns the Volcker Rule was intended to address, such as credit funds, venture capital funds, customer facilitation funds, and family wealth management vehicles; and
  • clarifying that credit exposures to a covered fund would generally not constitute ownership interests under the Volcker Rule, among other provisions.

A Cadwalader memorandum with further analysis on this rulemaking is forthcoming.

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