Community banks are set to be exempted from the Volcker Rule.
Five US federal financial regulatory agencies have adopted a final rule to exclude community banks from the regulation, a move that they claim is consistent with the Economic Growth, Regulatory Relief, and Consumer Protection Act.
The Volcker Rule generally restricts banking entities from engaging in proprietary trading and from owning, sponsoring, or having certain relationships with hedge funds or private equity funds.
Under the final rule, which is unchanged from the proposal, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5% or less of total consolidated assets, are excluded from the Volcker Rule.
The final rule also permits a hedge fund or private equity fund, under certain circumstances, to share the same name or a variation of the same name with an investment advisor as long as the advisor is not an insured depository institution, a company that controls an insured depository institution, or a bank holding company.
The final rule is being issued by the Federal Reserve Board, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.