Agencies sign off on final Volcker Rule changes

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WASHINGTON — Five federal agencies have officially signed off on a regulation simplifying the Volcker Rule, they said Tuesday.

The reforms will result in significant changes to the proprietary trading ban first proposed by former Federal Reserve Chairman Paul Volcker and mandated in the Dodd-Frank Act.

The new regulation, which the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency approved in August, is meant to streamline how firms determine which trades are prohibited. The final plan scrapped the so-called "accounting prong" that the regulators had proposed in 2018 but banks said would have unintended consequences.

But supporters of the trading ban have said the new regulation, which will go into effect Jan. 1, goes too far in easing banks' compliance standards.

“I am concerned the final rule would materially reduce the scope of covered activity, excessively rely on firms' self-policing, and narrow the Chief Executive Officer (CEO) attestation requirement, which together could substantially weaken the Volcker rule prohibition on proprietary trading,” said Federal Reserve Board Gov. Lael Brainard, who dissented from the board's vote, in a statement Tuesday. (The Fed voted to approve the new regulation on Oct. 3, according to the central bank's website.)

The Securities and Exchange Commission and the Commodity Futures Trading Commission also signed off on changes.

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Volcker Rule Regulatory relief Regulatory reform Lael Brainard Federal Reserve OCC FDIC SEC CFTC