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OCC Bulletin 2020-71 | July 31, 2020

Volcker Rule Covered Funds: Final Rule


Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties


On July 31, 2020, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the U.S. Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, and the U.S. Securities and Exchange Commission (collectively, the agencies) published a final rule amending the regulations that implement section 13 of the Bank Holding Company (BHC) Act, commonly known as the Volcker rule. The amendments are intended to continue the agencies’ efforts to improve and streamline the regulations implementing section 13 of the BHC Act by modifying and clarifying requirements related to the covered fund provisions of the act. The effective date of the final rule is October 1, 2020.

Note for Community Banks

Banks that have total consolidated assets equal to $10 billion or less and total trading assets and liabilities equal to 5 percent or less of total consolidated assets are generally exempt from the Volcker rule. See 12 CFR 44.2(r)(2) and OCC Bulletin 2019 32, “Volcker Rule: Final Rule.”


The final rule

  • permits the activities of qualifying foreign excluded funds;
  • revises the exclusions from the definition of “covered fund” for foreign public funds, loan securitizations, public welfare investments, and small business investment companies;
  • creates new exclusions from the definition of covered fund for credit funds, qualifying venture capital funds, family wealth management vehicles, and customer facilitation vehicles;
  • permits certain transactions that could otherwise be prohibited under 12 CFR 44.14 (commonly known as Super 23A);
  • modifies the definition of “ownership interest”; and
  • provides that certain investments made in parallel with a covered fund, as well as certain restricted profit interests held by an employee or director, need not be included in a banking entity’s calculation of its ownership interest in the covered fund.


Section 13 of the BHC Act generally prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a hedge fund or private equity fund (defined in the implementing regulations as “covered funds”). Authority for developing and adopting regulations to implement the prohibitions and restrictions of section 13 of the BHC Act is shared among the agencies. The agencies issued a final rule implementing section 13 of the BHC Act in December 2013 (the 2013 rule), and those provisions became effective on April 1, 2014.

The agencies published a notice of proposed rulemaking on July 17, 2018, that proposed amendments to the 2013 rule. On November 14, 2019, the agencies published a final rule that adopted many of the proposed changes concerning proprietary trading and compliance program requirements as well as targeted changes to the covered fund provisions. The preamble to the 2019 final rule stated that the agencies would continue to consider other aspects of the covered fund provisions and would issue a separate proposed rule that specifically addresses those areas. On February 28, 2020, the agencies published a notice of proposed rulemaking regarding the covered fund provisions.

This final rule adopts many of the changes proposed in the February 28, 2020, notice of proposed rulemaking, with targeted adjustments based on comments received.

Further Information

Please contact Tabitha Edgens, Counsel, or Mark O’Horo, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490; or Roman Goldstein, Risk Specialist, Treasury and Market Risk Policy, at (202) 649-6360.


Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

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