The US federal financial regulators recently approved the much-anticipated joint final regulation implementing the Volcker Rule, a key element of the 2010 Dodd-Frank financial reform legislation, which is intended to curtail the proprietary trading and private fund activities of US and non-US banking groups. The final regulation represents, in certain respects, a significant improvement upon the proposal released in fall 2011, particularly as it relates to limiting the extraterritorial impact of the regulation on non-US banking organizations. On the other hand, the final regulation leaves important questions from the proposal unresolved and creates new issues of its own, not least among them the manner in which Volcker Rule compliance will be supervised and enforced for complex banking organizations subject to the jurisdiction of multiple US regulators. This report summarizes the final regulation, including a banking entity’s obligations in advance of the termination of the Volcker Rule conformance period, now scheduled for July 2015, and highlights select issues of concern for many financial services firms.
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