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Tuesday, July 25, 2017

Agencies Take Steps to Address Volcker Rule Implementation Problems

The federal banking agencies began taking steps to address certain challenges with implementing the Volcker Rule. They announced additional time for foreign banks to address certain foreign funds that may have been unintentionally covered under Volcker, and the Federal Reserve announced guidelines for how banks can seek extensions for certain kinds of investments in hedge funds and private equity.

The Fed's action provides a conformance period until July 21, 2018, during which agencies will not take action against foreign banking entities based on whether the activities and investments of a qualifying foreign excluded fund are attributed or connected to the foreign bank. Under the guidelines, the Fed said that banks seeking an up-to-two-year extension of the requirement to conform certain “seeding” investments in hedge funds and private equity funds may apply to their local Federal Reserve Bank, which has been delegated authority to approve but not deny these requests.

While some changes depend on legislation in Congress, regulators have in recent months signaled their willingness to address Volcker Rule concerns. As it did in its recent white paper on the Volcker Rule, ABA continues to advocate with Congress and regulatory agencies for changes to improve the effectiveness of Volcker. 


Read the interagency guidance on foreign funds.  
Read the Fed's guidance on requesting an extension

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