Federal Reserve Sets 2 Year Compliance Window for the Volcker Rule

The Federal Reserve approved a final rule that outlines the timetable for compliance with the Volcker Rule.

The Volcker Rule does not take effect until 12 months after the FSOC issues the details of the rule or July 21, 2012, whichever is earlier. The Federal Reserve's final rule approved today provides a two year compliance period following the date the Volcker Rule becomes effective.

Nonbanks who are designated by the FSOC to be supervised by the Federal Reserve have a two year compliance window after being designated for oversight.

The Volcker Rule generally prohibits banking entities from engaging in proprietary trading in securities, derivatives, or certain other financial instruments and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

The Board has the ability to extend this conformance period three additional years under certain conditions.

The final rule is effective April 1, 2011 and mostly mirrors the draft rule that was proposed in November.

See the final rule.