What is considered an ownership interest in a covered fund?
Under the Volcker Rule, an “ownership interest” is defined broadly to include an equity, partnership or other “similar interest,” which includes the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment …
What is excluded from covered fund?
Exclusions from Covered Funds These exclusions are for credit funds, venture capital funds, family wealth management vehicles, and customer facilitation vehicles.
What is prohibited under Volcker Rule?
The so-called Volcker Rule is a federal regulation that prohibits banks from conducting certain investment activities with their own accounts, and limits their ownership of and relationship with hedge funds and private equity funds.
What is proprietary trading under the Volcker Rule?
What Is the Volcker Rule? Under the Volcker Rule, banks can no longer trade securities, derivatives, commodities future, and options for their own account. This is called proprietary trading. It limits their investment in, and relationships with, hedge funds or private equity funds.
Does Volcker Rule apply loans?
Thus, a commercial loan made to a corporate entity in the United States by an office of a foreign bank located outside of the United States will not, in itself, be sufficient to trigger the Volcker Rule prohibitions because, as explained below, commercial loans are not “financial instruments” covered by the Volcker …
What are Volcker trading exemptions?
The Volcker Rule contains exemptions from the prohibition on proprietary trading for underwriting and market making-related activities to the extent that these activities are designed not to exceed the reasonably expected near-term demands of clients, customers, or counterparties (RENTD).
When was the Volcker Rule implemented?
On December 10, 2013, the Volcker Rule regulations were approved by all five of the necessary financial regulatory agencies. It was set to go into effect April 1, 2014. The final rule had a longer compliance period and fewer metrics than earlier proposals.
Why the Volcker Rule was introduced?
The Volcker Rule is named after former Federal Reserve chairman, Paul Volcker, who proposed the rule as a way to curb the US banks’ speculative trading activities that did not benefit consumers.
Why is the Volcker Rule important?
The Volcker Rule aims to protect bank customers by preventing banks from making certain types of speculative investments that contributed to the 2007–2008 financial crisis. In addition, banks will not have to set aside as much cash for derivatives trades among different units of the same firm.
Why is it called the Volcker Rule?
The Volcker Rule is named after former Federal Reserve chairman, Paul Volcker, who proposed the rule as a way to curb the US banks’ speculative trading activities that did not benefit consumers. Volcker headed the Economic Recovery Advisory Body under the Obama administration in 2009.