Comptroller of the Currency Approves Proposal to Revise Volcker Rule Covered Funds Provisions

WASHINGTON—The Comptroller of the Currency today approved a proposed rule to revise the "covered funds" provisions in the regulations implementing Section 13 of the Bank Holding Company Act of 1956 (BHC Act), also known as the Volcker Rule.

"By approving the proposal today, we are helping to sharpen the focus of the Volcker Rule on those activities that presented risk to the federal banking system," said Comptroller of the Currency Joseph M. Otting. "The proposal would help provide additional options for capital that is critical to the growth of small businesses across the country. We are helping banks serve their customers more effectively and act as the engines of economic opportunity they should. At the same time, we are able to maintain key safeguards implemented following the last crisis to ensure our nation's banks operate in a safe, sound, and fair manner."

The notice of proposed rulemaking (NPR) approved by the Comptroller would: (1) permit the activities of qualifying foreign excluded funds; (2) revise the exclusions from the definition of covered fund for foreign public funds, loan securitizations, and small business investment companies; (3) adopt new exclusions for credit funds, qualifying venture capital funds, family wealth management vehicles, and customer facilitation vehicles; (4) permit certain transactions that could otherwise be prohibited under 12 CFR 44.14 (commonly known as Super 23A); (5) revise the definition of "ownership interest" for Volcker Rule purposes; and (6) provide that certain investments made in parallel with a covered fund as well as certain restricted profit interests held by an employee or director need not be included in a banking entity's calculation of its ownership interest in the covered fund.

The NPR will be published in the Federal Register pending approval by other participating agencies. The Federal Reserve Board and the Federal Deposit Insurance Corporation have provided public notice that those agencies intend to vote on the proposal during board meetings scheduled for January 30. The Securities and Exchange Commission and Commodity Futures Trading Commission are expected to take up the proposal shortly thereafter.

Comments must be received on or before April 1, 2020.

Related Link

• Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds (PDF)