Regulators Issue FAQs Regarding the Volcker Rule

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Securities and Exchange Commission issued joint FAQs regarding the implementation of Section 13 of the Bank Holding Company Act, also known as the Volcker Rule. The accompanying release states that the FAQs have been developed jointly by staff members of the five agencies charged with enforcing the Volcker Rule (including the CFTC), and that substantively identical versions will appear on the public websites of each agency. FAQs have not yet appeared on the CFTC website.

The FAQs address the following topics:

• the extent to which the Volcker Rule requirements (including the Tier 1 capital deduction provision for covered fund investments) apply during the conformance period;
• the definition of "trading desk" and, in particular, whether a trading desk can span multiple legal entities;
• the treatment of newly created foreign funds; specifically, confirming that a newly created fund intended to be a foreign public fund will be excluded from the definition of "covered fund" in the same fashion as a newly created fund intended to be a registered investment company under the '40 Act;
• the scope of the phrase "rights or other assets," as found in the loan securitization exemption;
• the trading metrics reporting dates; in particular, confirming that the largest institutions must begin capturing trading metrics on July 1, 2014 (with reporting commencing at the beginning of September); and
• the scope of the covered fund name-sharing prohibition, including several examples of prohibited name sharing.

The SEC's FAQ website states that these FAQs may be revised or updated from time to time.

See: SEC Staff FAQ; FRB FAQ; OCC FAQ. See generally: Cabinet Volcker Rule Materials. For questions or more information, please contact Scott Cammarn or Steven Lofchie.