Volcker Rule “1.5”: Analysis of Proposed Changes and Areas for Comment

On June 5, 2018, the five Volcker Rule regulatory Agencies announced publication of a Proposal to modify the Volcker Rule.

The Agencies have proposed a number of meaningful revisions to the Volcker Rule’s proprietary trading and covered fund restrictions, accompanied by numerous questions about potential modifications.  The overall tone and approach of the Proposal reflects an interest among the Agencies in implementing practical revisions to the 2013 Final Rule that will reduce “ambiguity, overbroad application, or unduly complex compliance routines”.  At the same time, some elements of the Proposal, such as the new accounting prong of the trading account definition and new notice and filing requirements, could increase the scope of the trading prohibition and compliance burdens on banking entities.

This Alert offers further in-depth analysis of the Proposal, building on our initial key takeaways available here, and highlights areas of likely interest to commenters.  The Alert (i) summarizes the key proposed modifications set forth in the Proposal and selected requests by the Agencies for industry comment, and (ii) offers our “Observations” analyzing key implications of the Proposal for the industry, including specific interpretive issues and questions presented that the industry will want to consider in developing comments on the Proposal.

This article was republished by the Harvard Law School Forum on Corporate Governance and Financial Regulation.