What is the revised Volcker Rule?
The Revised Volcker Rule allows a banking entity to enter into covered transactions with a related covered fund that would be exempt from the quantitative limits, collateral requirements, and low-quality asset prohibition under Section 23A of the Federal Reserve Act.
What is super 23A?
The so-called Super 23A provisions of the Volcker Rule generally prohibit “covered transactions” between a covered fund and a banking entity (and the affiliates of such banking entity) that sponsors or advises or organizes and offers such fund.
What is a Volcker Rule covered fund?
The Volcker Rule prevents banking entities and insured depository institutions from investing, or owning, any assets into covered funds or vehicles, suggesting that this sort of activity incorporates too much risk and does not benefit the customer base.
What does Volcker Rule prohibit?
What Is the Volcker Rule? The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
How does the Volcker Rule work?
The so-called Volcker Rule is a federal regulation that prohibits banks from conducting certain investment activities with their own accounts, and limits their ownership of and relationship with hedge funds and private equity funds.
What is Section 23B?
Section 23B protects a bank by requiring that transactions between the bank and its affiliates occur on market terms.
What is excluded from a covered fund?
The Volcker Rule excludes “loan securitizations” from the definition of “covered fund” so long as the loan securitizations are comprised of loans or other qualifying assets (e.g., cash equivalents, servicing assets, certain rate or foreign exchange derivatives, interests in a tax subsidiary or similar entity formed by …
Why was proprietary trading banned?
The Volcker Rule is one of the more controversial pieces of legislation to emerge from the financial crisis. Attached to the Dodd-Frank Act, the rule was intended to limit banks’ ability to make speculative investments that do not benefit their customers.
Is the Volcker Rule good?
The Volcker Rule impacts you in the following five ways: Your deposits are safer because banks can’t use them for high-risk investments. It’s less likely that banks will require another $700 billion bailout. Big banks won’t own risky hedge funds to improve their profit.