Agencies won't enforce Volcker Rule for foreign funds until July 2021

WASHINGTON — Banking regulators announced Wednesday that they will not penalize certain foreign banking firms under the Volcker Rule for an additional two years.

The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. issued a joint statement extending the longstanding moratorium on enforcing the proprietary trading ban for certain foreign funds organized outside the U.S. The agencies said they will not take any action related to a foreign fund until July 21, 2021.

In general, funds organized outside the U.S. are not part of the scope of the Volcker Rule, which was mandated under the 2010 Dodd-Frank Act. However, after the completion of the joint agency regulation to implement the ban in 2013, certain foreign banking organizations with U.S.-based intermediate holding companies complained that the rule as written could subject them to Volcker Rule enforcement because of their ownership stakes in these foreign funds.

The agencies said in a joint policy statement in July 2017 that they would examine how to amend the Volcker rule to clarify the status of foreign funds, and they would not issue enforcement actions against FBOs until they decided on a fix. The agencies issues a proposed revision to the Volcker rule last year, further extending the deadline until July 21 of this year.

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Volcker Rule Enforcement actions Dodd-Frank Federal Reserve FDIC OCC
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