Regulators roll out Volcker Rule regulations

{mosads}The Treasury Department, Federal Deposit Insurance Corp. (FDIC), Federal Reserve and Securities and Exchange Commission (SEC) signed off on that proposal, which was posted on the Fed’s website. The FDIC’s board is also expected to approve the proposal Tuesday.

However, the Commodity Futures Trading Commission (CFTC) did not sign off on the joint proposal, even though it has a role to play in Volcker implementation. The CFTC will either have to eventually join the broader effort, or issue its own take that later will have to be harmonized with the proposal from other regulators.

As written, the proposed rule includes several exemptions — for example, federal debt and state and local debt are exempt from the restrictions, and the proposal allows banks to engage in certain activities that would otherwise be banned, such as market marking and hedges intended to mitigate risk.

However, if a bank does engage in those exempted activities, it must set up an internal compliance program specifically tailored to ensure it stays within the boundary of the Volcker Rule and its regulations.

Banks with major trading operations must also provide data to regulators allowing them to identify potential Volcker violations or other high-risk assets or trading.