Clifford Chance

U.S. Regulators Implement the Volcker Rule

16 December 2013

On December 10, 2013, five U.S. regulators published joint final regulations to implement the portion of the Dodd-Frank Act known as the Volcker Rule. The Volcker Rule generally prohibits banking entities from engaging in short-term proprietary trading and generally restricts banking entities from owning, sponsoring, or having certain interests in, or relationships with, hedge funds or private equity funds, subject to specified exceptions and clarifications, but also impacts a number of other activities by banks that have U.S. operations.

The Implementing Regulations were developed jointly by the U.S. Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, and will become effective on April 1, 2014. Beginning June 30, 2014, banking entities with $50 billion or more in consolidated trading assets and liabilities (including non-U.S. banks with specified levels of U.S. trading activities) will be required to report specified quantitative measurements. Covered banking entities will have until July 21, 2015 to fully conform existing operations to the requirements of the Implementing Regulations. Banking entities that engage in activities covered by the Volcker Rule will need to establish compliance programs to ensure and monitor compliance with the prohibitions and restrictions of the Volcker Rule and the Implementing Regulations.

This client alert provides only a general high level overview of selected provisions – a more detailed briefing on the Implementing Regulations will follow.

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