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From Banking and Finance Law Daily, August 2, 2017

OCC seeks public’s input on Volcker Rule clarification and recalibration

By John M. Pachkowski, J.D.

The Office of the Comptroller of the Currency has released a notice, which will appear in the Federal Register, seeking comments on how to revise its regulations implementing the Volcker Rule. However, the OCC stressed that its notice was not seeking changes to the underlying Volcker Rule statute.

Comments must be received within 45 days from publication in the Federal Register.

In issuing its notice, the OCC stated there is "broad recognition that the final rule [implementing the Volcker Rule] should be improved both in design and in application." The agency cited the Treasury Department’s June 2017 report that identified problems with the design of the final rule as the impetus for its notice.

Also, recent activity by the Financial Stability Oversight Council discussed potential improvements to the Volcker Rule and called upon the OCC and the other rule writing agencies—Federal Reserve Board, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Commodity Futures Trading Commission—to clarify the final rule’s definition of "proprietary trading," improving the rule’s exemptions for market-making and risk-mitigating hedging activities, and enhancing the rule’s definition of "covered fund" (see Banking and Finance Law Daily, July 31, 2017).

Areas to be considered. The OCC is seeking comments on four broad areas:

  1. the scope of entities to which the final rule applies;
  2. the proprietary trading restrictions;
  3. the covered fund restrictions; and
  4. the compliance program and metrics reporting requirements.

Specificity of comments. Any comments submitted to the OCC must provide information and "data" describing with specificity any burdens or inefficiencies resulting from the current rule and explaining how particular revisions would alleviate those burdens or inefficiencies. The OCC noted that, for purposes of the its information request, "data" includes "both quantitative and qualitative information, as well as other verifiable evidence supporting respondents’ comments and suggestions."

Path forward. Following release of the notice, Acting Comptroller of the Currency Keith Noreika said, "A bipartisan consensus has emerged that the Volcker Rule needs clarification and recalibration to eliminate burden on banks that do not engage in covered activities and do not present systemic risks. Regulators do not have a monopoly on good ideas. Public input will help inform our path forward with the views, concerns, and data of those affected by this rule and provides for a more inclusive and transparent process."

In a statement, Rob Nichols, president and CEO of the American Bankers Association, welcomed the OCC’s request for public comment and said, "At the end of the day, we all seek an implementation program that is clear and promotes financial stability and economic growth." He added, the ABA Intends to be active participants in the public reform discussion.

Companies: American Bankers Association

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