Subject to certain exceptions, the Volcker Rule prohibits a "banking entity " 1 from, as principal, "sponsoring," acquiring or retaining an "ownership interest" in or making certain transactions with "covered funds," which include most hedge funds and private equity funds, after July 21, 2015. The Volcker Rule. Podcast: Proposed Amendments to the Volcker Rule's Covered ... Under the Volcker rule, a covered fund is anything not considered an investment company. • Scope of Funds Covered—The definition of a "covered fund" is more circumscribed under the Final Rules. Volcker Rule Background The Volcker Rule contains two prohibitions aimed at "banking S&C Publication: Volcker Rule Covered Funds Amendments The Volcker Rule and its regulations generally prohibit banking entities and affiliates from engaging in proprietary trading or sponsoring or acquiring ownership interests in certain private funds ("covered funds"). Part 351 — Proprietary Trading and Certain Interests In and Relationships With Covered Funds implements Section 13 of the Bank Holding Company Act, also known as the Volcker Rule, which addresses prohibitions and restrictions on proprietary trading and investment in, or relationships with, covered funds In December 2013, five federal financial regulatory agencies (collectively, the "Agencies"),2 adopted a final rule (the "Final Rule") construing the Volcker Rule.3 The Final Rule also sets out a This rulemaking was a momentous undertaking, with teams in the Divisions of Investment Management, Economic and Risk Analysis, and Trading and Markets, as well as the Office of General Counsel working under often . Volcker Relief: Agencies Simplify and Narrow the Rule's ... Volcker Rule Covered Fund Amendments and CLOs - Jones Day As discussed above, the Volcker Rule has two general prohibitions regarding fund activities. Federal Reserve Board - Volcker Rule An additional proposed rulemaking on a broader set of covered funds issues is forthcoming. Revised Volcker Rule Broadens Exclusions to Covered Funds ... The goal of the Volcker rule The objective of the Volcker Rule is to stop all proprietary trading (which is defined quite broadly) by commercial banks (such as HSBC) i.e. The Revised Volcker Rule allows a banking entity to enter into covered transactions with a related covered fund that would be exempt from the quantitative limits, collateral requirements, and low-quality asset prohibition under Section 23A of the Federal Reserve Act. With the release of the New FAQ, the Agencies have clarified that the . : Federal Agencies Finalize Amendments to Covered Funds Provisions. FDIC | Banker Resource Center: Volcker Rule The Volcker Rule · The Hedge Fund Journal The Federal Reserve, OCC, FDIC, SEC, and CFTC have modified their Volcker Rule Regulations effective October 1, 2020. The Volcker rule was further amended to allow banks to invest 3% of Tier 1 capital into hedge funds and private equity funds, an amount that would exceed $6 billion a year for Bank of America alone. The US federal regulatory agencies responsible for implementing the Volcker Rule recently issued a rule (Final Rule) 1 Although well-intentioned, the originally enacted covered funds section of the Volcker Rule, which went into effect April 1, 2014, missed the mark. The Volcker Rule and Private Funds: Final Regulations Are Out . In contrast to the Proposed Rules, the Final Rules . The Final Volcker Rule establishes three main areas of "prohibitions and restrictions on proprietary trading by, and investments in or relation- ships with covered funds by, certain banking entities." "2020 Revisions").1 The 2020 Revisions address the prohibitions and restrictions regarding covered fund activities. Section 12 Permitted investment in a covered fund. Final rules amending the Volcker Rule are being adopted; the revisions address compliance and metrics, proprietary trading, and covered funds. The "covered fund" provisions of the Volcker Rule generally restrict or prohibit a "banking entity" from investing in, or sponsoring or having certain other relationships with, a covered fund. On December 10, the five federal agencies responsible for writing regulations implementing the . Banking entities have until 21 July 2015 to adjust their affairs in order to ensure compliance (subject to possible extension in limited circumstances). The Volcker Rule, which implements restrictions and requirements on sponsorship of, or investment in, hedge funds by banks, took effect in late July 2015. The Proposed Funds Rule would exempt all "qualifying foreign excluded funds" from the Volcker Rule's proprietary trading and covered fund restrictions. Section 11 Permitted organizing and offering of a covered fund. This position is consistent with one of the policy goals of the Volcker Rule, namely that the Volcker Rule should not provide foreign banking organizations a competitive advantage over U.S. banking entities with respect to offering covered fund services in the United States. Final Volcker Rule 2.1 - Covered Funds June 26, 2020 Overview The Federal Reserve, OCC, FDIC, SEC and CFTC (Agencies) have approved final amendments to the covered funds portion of the regulations implementing the Volcker Rule (Final Amendments). The final rule requires a vehicle that is a covered fund (as opposed to a RIC or a FPF) during its seeding period and that is formed and operated pursuant to a written plan to become a RIC to apply to the Board for an extension of the one-year seeding period already granted to such covered funds. 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