Final Volcker rules — a gift for non-US investment funds?

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Five US federal agencies have issued final rules to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Volcker rule). Compared with the previous proposed regulations, the final Volker rule contains some good news for foreign funds that previously looked like being subject to the rule.

The final Volker rule contains two prohibitions, each of which are subject to exceptions. First, it prohibits insured depository institutions and companies affiliated with insured depository institutions from engaging in proprietary trading of certain instruments, for their own account.

Second, a banking entity may not, as principal, directly or indirectly, acquire or retain any ownership interest in or sponsor a ‘covered fund’…

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