Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

Two new Volcker Rule FAQs have been issued.

One FAQ addresses a bank’s market making activities.  Amongst other things, the FAQ affirms that for purposes of meeting the final rule’s exemption for market-making, a reasonably designed compliance program for a trading desk engaged in market making-related activity may include objective factors on which the trading desk may reasonably rely to determine whether a security is issued by a covered fund.  Objective factors are factual criteria that can be used to reliably identify whether an issuer or a particular type of issuer is a covered fund.  As an example, an objective factor would include whether the securities of the issuer were offered in transactions registered under the Securities Act.  Objective factors would not be considered part of a reasonably designed compliance program if the banking entity designed or used such objective factors to evade section 13 and the final rule.

The other FAQ addresses the timing of the CEO certification required by Section 255.14(a)(2)(ii)(B) of the final rule.  Staffs of the agencies which administer the Volcker Rule believe that banking entities that are required to provide the annual CEO certification for prime brokerage transactions as of the end of the conformance period should submit the first CEO certification required under § 255.14 after the end of the conformance period but no later than March 31, 2016.  In any case, a banking entity should provide the CEO certification annually within one year of its prior certification.  Moreover, the FAQ states that under the final rule, the CEO has a duty to update the certification if the information in the certification materially changes at any time during the year when he or she becomes aware of the material change.


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