What activity is permitted under an exclusion from the Volcker Rule?
The Final Rule creates a new exclusion for funds that make loans, invest in debt, or otherwise provide credit that Banking Entities are permitted to provide directly under existing federal banking laws. The exclusion is available only to funds that do not issue asset-backed securities or engage in Proprietary Trading.
Which of the following activities are permitted under the Volcker Rule?
These permitted proprietary trading activities include (1) underwriting activities, (2) market making–related activities, (3) risk-mitigating hedging activities, (4) trading in U.S. and non-U.S. government securities, (5) trading on behalf of customers, (6) trading by a regulated insurance company, and (7) trading …
Where is the Volcker Rule codified?
Each of the Volcker Rule regulations as codified in different sections of the Code of Federal Regulations (C.F.R.) 12 C.F.R. Part 44 (Office of the Comptroller of the Currency)(OCC); 12 C.F.R. Part 248 (Board of Governors of the Federal Reserve System) (FRB); 12 C.F.R.
What are the main prongs of the Volcker Rule?
Per the 2013 Final Rule “trading account” was defined based on three main prongs: (1) short-term intent prong1, (2) market risk capital prong2, and (3) dealer prong3. In addition, the proposal removes enhanced documentation requirements for financial instruments commonly used by the trading desk to hedge risk.
Why was the Volcker Rule introduced?
The Rule, named after former Federal Reserve Chairman Paul Volcker, aims to limit risk-taking by federally insured depository institutions (IDI), prohibiting high risk speculative activities that previously created unacceptable levels of systemic risk.
When was the Volcker Rule implemented?
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.
When was Volcker Rule implemented?
What is the Volcker Rule and why and when was it established?
The Volcker Rule’s origins date back to 2009, when economist and former Federal Reserve (Fed) Chair Paul Volcker proposed a piece of regulation in response to the ongoing financial crisis (and after the nation’s largest banks accumulated large losses from their proprietary trading arms).
What did the Volcker Rule do?
The Volcker rule generally prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds.
Why is it called the Volcker Rule?
The Volcker Rule is named after former Federal Reserve chairman, Paul Volcker, who proposed the rule as a way to curb the US banks’ speculative trading activities that did not benefit consumers. He argued that the banks’ speculative trading activities contributed to the 2008 financial crisis.
Is the Volcker Rule good?
The Volcker Rule impacts you in the following five ways: Your deposits are safer because banks can’t use them for high-risk investments. It’s less likely that banks will require another $700 billion bailout. Big banks won’t own risky hedge funds to improve their profit.
How does the Volcker Rule protect banking customers?
The Volcker Rule impacts you in the following five ways: Your deposits are safer because banks can’t use them for high-risk investments. It’s less likely that banks will require another $700 billion bailout. Big banks won’t own risky hedge funds to improve their profit. Your local community bank now has a better chance to succeed and not get .bought out by a big bank.
What is a covered fund under Volcker Rule?
The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
What is the purpose of the Volcker Rule?
What is the ‘Volcker Rule’. The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
Does Volcker Rule conflict with Basel?
The Volcker rule approved today by Securities and Exchange Commission and yesterday by the Federal Reserve may conflict with one of the central reforms global regulators agreed to put in place as part of the Basel III regulations. And it will all turn on what regulators mean by the phrase “near-term.”