Five federal agencies issued final rules developed jointly to implement section 619 of the Dodd-Frank Act often referred to as the Volcker Rule.
The final rules prohibit insured depository institutions and companies affiliated with insured depository institutions ("banking entities") from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on banking entities' investments in, and other relationships with, hedge funds or private equity funds.
The final rules provide exemptions for certain activities, including market making, underwriting, hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds or private equity funds.
The compliance requirements under the final rules vary based on the size of the banking entity and the scope of activities conducted.
Read the Federal Reserve’s press release.