As the U.S. bank regulatory agencies continue their efforts to implement the Volcker Rule under increasing political pressure to stiffen the Rule’s requirements, it is worth revisiting how the Rule, in its current proposed form, might affect non-U.S. banks and their activities even outside the United States. The full impact of the Volcker Rule on non-U.S. trading and fund businesses is only now coming into focus, as the U.S. bank regulators expect banking firms, including non-U.S. firms, to begin to develop compliance programs. This bulletin summarizes in a single place the ways in which the Volcker Rule may reach outside the U.S. borders and attempt to restrict the trading and investment fund-related activities of foreign banking firms.

In a nutshell, a non-U.S. firm with a subsidiary bank organized under U.S. law or with a branch or agency office in the United States may engage in trading or fund-related activity outside the United States only if (i) the activity has no U.S. contacts (including staff, facilities for the activity, and clients or counterparties) and (ii) the firm abides by several continuing requirements.