The Fed, OCC, FDIC, SEC and CFTC released a notice of proposed rulemaking on December 18, 2018 to amend the Volcker Rule. These changes have been proposed to create consistency with the statutory amendments under the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was enacted on May 24, 2018.

The proposed modifications include:

1. Clarifying and narrowing the definition of banking entity
2. Amending the restriction on name-sharing between banks and hedge funds or private equity funds

The definition of banking entity will be narrowed to reduce the regulatory burden on community banks by excluding institutions that do not have, and are not controlled by a company that has:

• Total trading assets and liabilities greater than 5% of total consolidated assets; and
• Over $10 billion in total consolidated assets

This proposal makes clear that this exemption only applies to institutions that are below both thresholds.

The name-sharing restriction under the Volcker Rule does not allow a banking entity, or a banking entity affiliate, to share the same name, or a variation of the same name, with a private equity fund or hedge fund that it organized or offered.

The proposed changes would allow name-sharing between a private equity fund or hedge fund and the banking entity that is an investment adviser to that fund, under three conditions:

• The name does not contain the word “bank;”
• The investment adviser is not a bank holding company for purposes of Section 8 of the International Banking Act of 1978 (IBA), an insured depository institution, or a company that controls an insured depository institution; and
• The investment adviser does not share the same name or a variation of the same name with any such entities.

The first condition is part of the Volcker Rule and would remain unchanged. The definition of “sponsor” under the Volcker Rule would also be modified to conform to these proposed amendments.

Written comments from the public must be submitted within 30 days of publication of the proposal in the Federal Register.