Feds Announce Proposal To Simplify, Tailor Volcker Rule

On July 17, the five main federal financial regulatory bodies — the Board of Governors of the Federal Reserve System (the Fed), the Securities and Exchange Commission, the Federal Deposit Insurance Corp., the Commodities Futures Trading Commission and the Office of the Comptroller of the Currency — published a proposed rule to simplify and tailor the so-called Volcker Rule, a provision under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that generally prohibits banking entities (including so-called nonbank systemically important financial institutions, or SIFIs) from engaging in proprietary trading and from owning or controlling "covered funds." (Covered funds are entities, such as hedge funds or private equity funds, relying on certain specified exemptions from the Investment Company Act of 1940.)