UPDATE: Aug. 20, 2019: The Office of the Comptroller of the Currency on Tuesday approved the overhaul of the Volcker Rule ahead of a vote on the measure by the Federal Deposit Insurance Corp. (FDIC).
"After extensive comment and feedback through the rulemaking process, I am pleased to approve changes to the 'Volcker Rule' that simplify the rule in a common sense way that preserves the safety and soundness of the federal banking system and eliminates unintended negative consequences of the prior rule," Comptroller of the Currency Joseph Otting said Tuesday in a statement.
Dive Brief:
- The FDIC is expected to vote Tuesday on a revamp of the Volcker Rule that would simplify the ban on proprietary trading and allow banks to put more money in investment funds, according to Bloomberg.
- Banks, while underwriting or providing liquidity for clients, won't have to count their investments in third-party funds against established limits on private equity and hedge funds, according to sources who spoke anonymously to the wire service.
- The Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission also must sign off on the rule changes. They are expected to do so in the following weeks.
Dive Insight:
Wall Street bankers have sought clarity on the restrictions on private equity and hedge fund investment, which regulators failed to address in the rush to propose a Volcker Rule rewrite last year.
Tuesday's move aims to "simplify the rule, provide more certainty for banks, and tailor requirements to reflect the size and scope of a bank’s trading activities," the FDIC said Friday in a statement.
The overhaul also will likely reduce the amount of information banks will need to report to regulators, people familiar with the matter said. The result should make compliance simpler and less costly for banks.
Regulators are expected to ditch a proposal to link compliance to accounting rules, relying instead on existing tests to determine banned trades.
