Banking Agencies Extend Review of Certain Foreign Funds under Volcker Rule

The Federal Reserve Board, FDIC and Office of the Comptroller of Currency (collectively, "the agencies") will not take action against a foreign banking entity with certain foreign funds that are excluded from the "covered fund" definition in Section 13 of the Bank Holding Company Act (the "Volcker Rule") for a two-year period ending on July 21, 2021.

The agencies stated that they are not taking actions against the foreign banking entities in anticipation of clarifying the treatment of qualifying foreign excluded funds under the Volcker Rule, which prohibits banking entities from facilitating certain relationships with a hedge fund or private equity fund. The agencies noted that the Volcker Rule has raised concerns because of the potential unintended consequences, such as certain foreign funds possibly falling within the definition of "banking entity." The agencies previously requested comments on a notice of proposed rulemaking regarding the rule, but reported that that they have not finalized any revisions.