On January 30, 2020, the Federal Reserve Board, OCC, FDIC, SEC and CFTC (the Agencies) proposed amendments to the covered fund provisions of the Volcker Rule. The proposed amendments address long-standing concerns with the over-broad definition of covered fund, the treatment of foreign funds (both public and private), and the Super 23A prohibition.

The proposal is relatively short and straight-forward.  It reflects the approach of Federal Reserve Vice Chair Randal Quarles to simplify the Volcker Rule “in light of our experience with the rule over six years of implementation” and to allow banking entities to conduct “additional fund-related activities, which do not present the risks that the Volcker Rule was intended to address.”

The Agencies proposed no further meaningful changes to the proprietary trading provisions or the compliance program requirements of the Volcker Rule.  Nor did they resolve every open question regarding covered funds; the proposal includes 87 questions for comment on a variety of covered fund issues.  Unlike in the May 2018 proposal, however, those questions are accompanied by specific proposals to amend and streamline the existing final rule as largely adopted in December 2013.

Please see our client memorandum for more details.

Law Clerk Russell Quarles contributed to this post.

View as a PDF