The Volcker Rule — an overview

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More than two years after they were originally proposed, on 10 December 2013 the federal banking agencies, the Securities and Exchange Commission and the Commodity Futures Trading Commission adopted final regulations to implement section 13 of the Bank Holding Company Act (commonly known as the ‘Volcker Rule’).

The final rule — which is the culmination of a well-reported and extraordinary regulatory process — is approximately 70 pages long and accompanied by a 900-page preamble that seeks to provide interpretive guidance, respond to the extensive comments received on the proposed rules and clarify the intent of the agencies.

Institutions within the ambit of the Volcker Rule must now begin the process of finalising strategic decisions and implementing a significant compliance programme to accommodate the final rule’s intricate limits on trading and investment activities. In taking these steps, institutions also must consider, in addition to the Volcker Rule, certain other rules, such as the capital rules (including a new Basel fund investment framework) and the liquidity coverage ratio…

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