Agencies Adopt Volcker Reforms on Covered Funds, Affiliate Transactions

The federal banking agencies today approved an interagency final rule amending the Volcker Rule’s treatment of covered funds and transactions with affiliates. The final rule revises the “covered funds” regulatory provisions of the Volcker Rule, which places significant restrictions on financial institutions’ ability to have certain interests in, or relationships with, hedge funds and private equity funds, and the so-called “Super 23A” provision, which restricts certain transactions with affiliates that apply to those types of relationships.

“Providing for covered fund exclusions and affiliate transaction reforms under the Volcker Rule will bolster capital formation, customer choice and community development efforts, while preserving traditional banking services,” said American Bankers Association President and CEO Rob Nichols.

ABA has long advocated for exclusions from the Volcker Rule for venture capital funds, credit funds, family wealth management vehicles, and customer facilitation funds to help promote economic growth and job creation. The agencies adopted these covered fund exclusions among others, as well as ABA-advocated Super 23A reforms. The agencies also adopted additional ABA recommendations, including an express exclusion from the Volcker Rule for public welfare investments and for qualified opportunity funds.