Volcker Rule—Foreign Bank Issues: Highlights of Certain Issues Facing Foreign Banks in Draft Notice of Proposed Rulemaking to Implement Volcker Rule

Sullivan & Cromwell LLP - October 6, 2011

On October 5, a “Confidential Staff Draft of September 30, 2011” of the preamble to the federal banking agencies’ (and the U.S. Securities and Exchange Commission’s) joint notice of proposed rulemaking (the “Draft Release”) to implement the Volcker Rule provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act became available through The American Banker. It is uncertain to what extent the official joint notice of proposed rulemaking, when issued, will be consistent with the Draft Release. The Draft Release presents a number of issues for financial institutions generally and foreign banks in particular. The attached memorandum focuses on issues of potential serious concern for foreign banks, as well as the United States’ position as a financial center, with respect to the Draft Release’s treatment of the proprietary trading activities of foreign banks.