Volcker Rule Implementation (2025)

FAQs

What are the final rules to implement the Volcker Rule? ›

The final rule prohibits banks from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rule also imposes limits on banks' investments in, and other relationships with, hedge funds or private equity funds.

On December 10, 2013, the Volcker Rule regulations were approved by all five of the necessary financial regulatory agencies. It was set to go into effect April 1, 2014. The final rule had a longer compliance period and fewer metrics than earlier proposals.

They include the following seven circumstances: (1) acting as an agent, broker, or custodian, (2) permitted organizing and offering, (3) permitted underwriting and market making, (4) investing in a fund organized by a banking entity, (5) risk-mitigating hedging activities, (6) activities and investments outside of the ...

The Volcker rule generally prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds.

➢ Section 619 of the Dodd-Frank Act, commonly referred to as the Volcker Rule, generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

The Volcker Rule prohibits banks from using their own accounts for short-term proprietary trading of securities, derivatives, and commodity futures, as well as options on any of these instruments.

Thus, the Volcker Rule's jurisdictional provisions have extensive, but not unlimited extraterritorial effect. The Volcker Rule does apply to every foreign entity that directly or indirectly maintains a bank branch or agency in the United States, or controls a commercial lending company.

During his tenure as chairman, Volcker was widely credited with having ended the high levels of inflation seen in the United States throughout the 1970s and early 1980s, with measures known as the Volcker shock. He previously served as the president of the Federal Reserve Bank of New York from 1975 to 1979.

Loosely put, the Rule defines a covered fund as anything considered an investment company in the Investment Company Act, including private equity and hedge funds, as well as commodity pools with certain exclusions, and funds sponsored by a US banking entity where the affiliate holds ownership interests.

The Volcker Rule generally prohibits a banking entity from entering into transactions with a related fund that w ould be a covered transaction under section 23A of the Federal Reserve Act if the banking entity w ere a member bank and the fund w ere its affiliate.

What is the Volcker Rule for market making? ›

The Volcker Rule contains exemptions from the prohibition on proprietary trading for underwriting and market making-related activities to the extent that such activities are designed not to exceed the reasonably expected near-term demands of clients, customers or counterparties (“RENTD”).

The Volcker Rule (which generally prohibits banking entities from engaging directly or indirectly in proprietary trading) permits proprietary trading by FBOs provided that such trading is conducted "outside the United States." One of the conditions to utilizing the TOTUS exemption is that the FBO be a QFBO and that the ...

The Volcker Rule generally restricts banking entities from engaging in proprietary trading and from owning, sponsoring, or having certain relationships with a hedge fund or private equity fund.

The Volcker Rule included in the Dodd-Frank Act prohibits banks from proprietary trading and restricts investment in hedge funds and private equity by commercial banks and their affiliates.

The Volcker Rule prohibits proprietary trading by banking entities - in effect, reintroducing to the financial markets a substantial portion of the Glass-Steagall Act's static divide between banks and securities firms.