"Final Regulations Implementing the Volcker Rule: Proprietary Trading"

On December 10, 2013, in connection with Title VI of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (each, an "Agency" and collectively, the "Agencies") adopted final regulations (the "Final Rule") to implement section 619 of the Dodd-Frank Act, the so-called "Volcker Rule".  Section 619 of the Dodd-Frank Act adds a new section 13 to the Bank Holding Company Act of 1956, which generally prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring or having certain relationships with a hedge fund or private equity fund, subject to numerous exemptions.

The adoption of the Final Rule arrives more than two years after the Agencies' introduction of proposed regulations implementing the Volcker Rule (the "Proposed Rule").  While the Final Rule retains the basic framework of the Proposed Rule, the Final Rule incorporates a substantial number of refinements and clarifications, in part due to the high volume of comments received by the Agencies on virtually all aspects of the Proposed Rule.

This Stroock Special Bulletin summarizes key provisions of the proprietary trading aspects of the Final Rule and highlights key differences from the Proposed Rule.