News Release 2020-11 | January 30, 2020

Agencies Propose Changes to Modify "Covered Funds" Restrictions of Volcker Rule

Joint Release

Board of Governors of the Federal Reserve System
Commodity Futures Trading Commission
Federal Deposit Insurance Corporation
Office of Comptroller of the Currency
Securities and Exchange Commission

Five federal financial regulatory agencies on Thursday invited public comment on a proposal to modify regulations implementing the Volcker rule’s general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds – known as "covered funds."  

Since the regulations implementing the Volcker rule were finalized in 2013, the rule has created compliance uncertainty and imposed limits on certain banking services and activities that the Volcker rule was not intended to restrict.  To address these concerns, the agencies simplified requirements for the proprietary trading restrictions in November 2019.  Today’s proposal would modify the restrictions for banking entities investing in, sponsoring, or having certain relationships with covered funds.

In particular, the joint agency proposal would improve and streamline the covered funds portion of the rule, address the treatment of certain foreign funds, and permit banking entities to offer financial services and engage in other permissible activities that do not raise concerns that the Volcker rule was intended to address.

The proposed changes were jointly developed by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

Comments will be accepted until April 1, 2020.

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Media Contacts

Federal Reserve
Eric Kollig
202-452-2955

CFTC
Office of Public Affairs
202-418-5080

FDIC
Julianne Fisher Breitbeil
202-898-6895

OCC
Bryan Hubbard
202-649-6870

SEC
Office of Public Affairs
202-551-4120