FRB Announces Extension of Conformance Period under the Volcker Rule (with Foster Comment)

The Board of Governors of the Federal Reserve System ("FRB") issued a widely requested order to extend the conformance period under the Volcker Rule on an industry-wide basis for "covered fund" investments and relationships.

The order extends the period in which affected banking entities must conform their investments and activities in respect of covered funds to the requirements of the Volcker Rule. Additionally, the order, which became effective on December 18, 2014, extends the conformance period from July 21, 2015 to July 21, 2016. It further states that at some point next year, the Federal Reserve intends to grant the final one-year extension available under the Volcker Rule, which ultimately will extend the conformance period to July 21, 2017.

The extension is limited to covered fund investments and relationships that were in place prior to December 31, 2013. No extension is provided with respect to proprietary trading activities, which remain subject to the conformance deadline of July 21, 2015.

Foster Comment: The order brings near-term relief to banking entities that were struggling to review thousands of entities and transactions for potential Volcker Rule issues in anticipation of a January deadline to submit bank-specific extension requests.

See: Order Approving Extension of Conformance Period; FRB Press Release; SIFMA Statement Regarding Volcker Rule.See also: Volcker Specialty Page (available to Cabinet subscribers only).