Federal Reserve Issues Proposal to Implement Volcker Rule Conformance Period
November 17, 2010
Circular No. 12261

The Federal Reserve Board has requested comment on a proposed rule to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that give banking firms a defined period of time to conform their activities and investments to the so-called Volcker Rule.

The Volcker Rule generally prohibits banking entities from engaging in proprietary trading in securities, derivatives or certain other financial instruments, and from investing in, sponsoring or having certain relationships with a hedge fund or private equity fund. The statute generally provides banking entities two years to bring their activities and investments into compliance with the Volcker Rule, and allows the Board to extend this conformance period for specified periods under certain conditions.

The Dodd-Frank Act requires that the Board issue rules implementing the Volcker Rule's conformance period.

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