Title VII And The Volcker Rule: Same Swap, Different Rules

Now that the final rule¹ implementing Section 619 of the Dodd-Frank Act,² commonly known as the "Volcker Rule,"³ has been implemented, banking entities engaged in swaps activities must plan how they will navigate the two different and overlapping regulatory regimes that will apply to the same transactions: the Volcker Rule and Title VII of the Dodd-Frank Act ("Title VII"). This challenge will be made greater by the fact that each regime will be interpreted and applied by different federal regulators, each of which will have a varying supervisory purpose.

The policies behind the two titles of Dodd-Frank that regulate the use of swaps are quite different. Title VII is a comprehensive set of regulatory requirements placed on a previously largely unregulated market. The purpose of Title VII was to bring greater transparency to a market considered opaque in size, pricing and risk. The Volcker Rule, which was adopted as Chapter 13 to the Bank Holding Company Act, is the