On December 18, 2018, five federal agencies (the “Agencies”) released a proposed rule (“Proposed Rule”) to conform the regulations implementing the Volcker Rule to statutory modifications provided by Sections 203 and 204 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Regulatory Relief Act”). The Proposed Rule will not change the manner in which the Volcker Rule is currently administered, since the relevant provisions of the Regulatory Relief Act were effective upon enactment. The Agencies invite comment on the Proposed Rule within 30 days after the date of publication in the Federal Register.

The Volcker Rule generally prohibits banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with, private equity funds and hedge funds. In 2013, the Agencies adopted regulations to implement the Volcker Rule. Since that time, banking entities subject to the Volcker Rule have found compliance with its restrictions quite burdensome, and the regulations exceedingly complex. And as a policy matter, since smaller community banks are generally not engaged in the types of activity covered by the Volcker Rule, questions have been raised as to whether the costs of applying the rule to such institutions outweigh the benefits.