Proposed Volcker Rule Amendment Excludes Community Banks

January 15, 2019

Five financial regulators have issued a proposal to omit certain community banks from the Volcker Rule, which limits proprietary trading. The Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission propose excluding from the Volcker Rule community banks possessing equal or less than $10 billion in total consolidated assets and trading assets, and liabilities equal or less than five percent of total consolidated assets.

Issued as Release No. BHCA-5, Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds, the proposal would also allow a hedge fund or private equity fund to share a similar name with an investment adviser. The naming option was banned under Section 13 of the Bank Holding Company Act, but the restriction will be canceled if the investment adviser is not an insured depository institution or considered a bank holding company.

Comments on Release No. BHCA-5 are due 30 days after the proposal is published in the Federal Register.