The Board of Governors of the Federal Reserve System (“FRB”), the CFTC, the FDIC, the Office of the Comptroller of the Currency and the SEC (the “Agencies”) published in the Federal Register an interim final rule permitting banking entities to retain interests in certain collateralized debt obligations (“CDOs”) backed primarily by trust preferred securities (“TruPS”), notwithstanding the investment prohibitions of Dodd-Frank Section 619 (the “Volcker Rule”), provided that the TruPS securities in the CDO in question consist predominantly of TruPS issued by a bank with less than $15 billion in assets as of May 19, 2010.

Effective Date:  The interim final rule is effective on April 1, 2014.

Comments Due:  Comments on the interim final rule should be received on or before March 3, 2014.

See:  79 FR 5223.
See also:  CFTC Acting Chairman Wetjen Statement of Support; CFTC Commissioner O’Malia Statement of Concurrence; SEC Commissioner Piwowar Statement of Dissent; SIFMA Statement.
Related news:  Volcker Lawsuit on TruPS-Backed CDO (December 30, 2013); Agencies Are Reviewing Treatment of Specified Collateralized Debt Obligations under Volcker Rule (December 27, 2013).

The Federal Reserve Board (“FRB”), FDIC, Officer of the Comptroller of the Currency (“OCC”) and the SEC (the “Agencies”), and the CFTC in a separate rule release, published in the Federal Register the adoption of final rules implementing Section 619 of the Dodd-Frank Act, commonly known as the “Volcker Rule.”  Though the CFTC adopted a final rule that is not a joint rule with the other agencies, the other agencies and the CFTC stated that they worked closely together to develop the same rule text and supplementary information.

The Agencies adopted a rule that would implement Section 13 of the Bank Holding Company Act, which was added by Dodd-Frank Section 619.  Section 13 contains certain prohibitions and restrictions on the ability of a banking entity and nonbank financial company supervised by the Board to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or a private equity fund.

The CFTC’s final rule is numbered as Part 75 of the Commission’s regulations.

Effective Date:  April 1, 2014.

See:  79 FR 5807 (CFTC Release); 79 FR 5535 (FRB, FDIC, OCC, SEC Release).
Related News:  Agencies Issue Final Volcker Rule (December 11, 2013).