10.13.2011
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Updates
The OCC, Fed, FDIC, and SEC issue Volcker Rule Proposals
On Tuesday, October 11, 2011, the Office of the Comptroller of the Currency (the "OCC"), the Federal Reserve Board (the "Fed"), the Federal Deposit Insurance Corporation (the "FDIC"), and the Securities and Exchange Commission (the "SEC") jointly issued proposed regulation implementing the so-called "Volcker Rule" requirements of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").
Section 619 generally contains two prohibitions. First, it prohibits federally insured depository institutions and their affiliates (banking entities) from engaging in short-term proprietary trading of any security, derivative, and certain other financial instruments for a banking entity's own account. Second, it prohibits owning, sponsoring, or having certain relationships with, a hedge fund or private equity fund.
The proposed regulations would require banking entities to establish an internal compliance program, subject to supervisory oversight, that is designed to ensure and monitor compliance with the statute's prohibitions and restrictions. The proposal also requires banking entities with significant trading operations to report to the appropriate federal supervisory agency certain quantitative measurements designed to assist the federal supervisory agencies and banking entities in identifying prohibited proprietary trading in the context of certain exempt activities and identifying high risk trading assets and strategies.
The Financial Stability Oversight Council Takes Steps Towards Regulation of "Systemically Important" Nonbank Financial Companies
On Tuesday, October 11, 2011, the Financial Stability Oversight Council (“FSOC”) released a notice of proposed rulemaking and proposed interpretive guidance on the FSOC’s authority to require supervision and regulation of certain nonbank financial companies. Section 113 of the Dodd-Frank Act authorizes the FSOC to require a nonbank financial company to be supervised by the Fed and be subject to prudential standards if the FSOC determines that material financial distress at the nonbank financial company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the nonbank financial company, could pose a threat to the financial stability of the United States.
The SEC Proposed Registration Rules for Security-Based Swap Dealers and Participants
On Wednesday, October 12, 2011, the SEC proposed new rules under Title VII of the Dodd-Frank Act. The proposed rules would proscribe the process by which security-based swap dealers and security-based swap participants must register with the SEC. The proposed rules lay out an electronic filing process, including a new form based upon the broker-dealer registration form, and other requirements.
© 2011 Perkins Coie LLP
