20 June 2018
Girish Patil

Trading and Trade Reporting

Girish Patil - Mindtree Ltd

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Volcker rule and the recent updates

22 August 2017  |  5830 views  |  0

Volcker Rule is a federal regulation that restricts banks from making speculative investments with their own customers’ accounts. The rule was proposed by former US Federal Reserve Chairman Paul Volcker as part of section 619 of Dodd-Frank Wall Street Reform and Consumer Protection Act to avoid financial stability similar. The decision for taken to avoid crises similar to 2008 financial crises. The rule prohibits commercial banks from:

  • Engaging in proprietary trading of securities, derivatives, commodity options and futures.
  • Owning or investing or sponsoring  hedge funds and private equity funds

The rule applies to these activities by US banks regardless of where the activities are conducted. However for Non-US Banks, it applies if the activities are conducting in the US.

The institutions are required to disclose their covered trading activities to the government, the compliance and reporting requirement however differs, depending on the size of the institution.

Recent Updates on Volcker Rule

Office of the Comptroller of the Currency (OCC) has sought the public comments on changes to Volcker rule. In the press release dated August 1, 2017, OCC has mentioned that it is interested in public’s input on whether aspects of the final rule and its implementation should be revised to ease banking organizations to reduce the compliance burden & gain the benefits restricted by the rule.

OCC is seeking comments on the following topics

  • The scope of the entities subject to the Volcker rule
  • The proprietary trading restrictions
  • The covered fund restrictions
  • The compliance program & metrics reporting requirements

There are 5 regulators that enforce Volcker rule: OCC, Federal Reserve Board, Federal Deposit Insurance Corp., Securities and Exchange Commission and the Commodity Futures Trading Commission & OCC is the first one to take the initiative of seeking public comments after the report released by US Treasury Department on June 13, 2017. In the report, Treasury Department recommended few amendments to the Volcker rule which includes

  • Exemption to the banks with less than $10 billion assets
  • Remove proprietary trading restrictions on larger banks

There are set of questions asked by OCC on each of the topics mentioned above subject to rules restrictions. Last date to submit the comments is September 21, 2017.


TagsRisk & regulationFinancial inclusion

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Girish is currently working with BFS Center of Excellence & responsible for research, blogs & client deliverable. His interests are derivatives trading, trade reporting, asset servicing & risk managem...

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