Volcker Rule: Agencies Release Proposed Rule Implementing the Volcker Rule

Sullivan & Cromwell LLP - October 12, 2011

On October 11, 2011, the federal banking agencies issued a 298-page notice of proposed rulemaking to implement the so-called “Volcker Rule” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Securities and Exchange Commission issued its notice on October 12, 2011. The Volcker Rule imposes broad restrictions on proprietary trading and investing in and sponsoring private equity and hedge funds by banking organizations. Although it is widely understood that the Volcker Rule affects larger U.S. banking organizations and non-U.S. banking organizations, other financial organizations with trading operations, asset management business or other operations that pool assets will need to consider its implications carefully. The agencies are seeking comment from the public on all aspects of their highly complex proposal and have included over 1,300 questions on nearly 400 topics in the proposal. The comment period ends on January 13, 2012.