New York, NY, September 21, 2017 – SIFMA today responded to the Office of the Comptroller of the Currency (OCC) request for comment on how the regulations implementing the Volcker Rule should be revised to better accomplish the purposes of the underlying statute and its impact on the efficient functioning of markets to facilitate growth.

“While we continue to believe the Volcker Rule is a solution in search of a problem, SIFMA appreciates the growing recognition by the Volcker Agencies of the problems with the current implementing regulations. We remain concerned that the current regulatory framework goes beyond statutory intent and is overly restrictive, impeding beneficial market activity at the expense of the economy, and ultimately consumers,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO. “SIFMA fully supports the efforts of the Volcker Agencies to streamline and simplify the implementing regulations, and offers our members’ recommendations on necessary revisions to achieve this goal.”

Specifically, SIFMA members note the Volcker Rule implementing regulations are (i) too broad, (ii) excessively complex, and (iii) uniquely prescriptive.  As such, the regulations have compromised the ability of financial institutions to serve clients and contribute to the growth of the broader economy.  The complexity of the implementing regulations, and the difficulties inherent in having five agencies tasked with implementing and interpreting the regulations, mean that many key interpretive issues remain unresolved.

SIFMA’s letter sets out recommendations for revisions to the implementing regulations that would mitigate unintended consequences and result in regulations that are more consistent with the statutory language and congressional intent.

Recommendations include:

• Revise the definition of proprietary trading to focus on speculative short-term standalone proprietary trading;
• Present the permitted activities as examples of what is not proprietary trading and recalibrate the requirement relating to reasonably expected near-term demand (RENTD) to avoid chilling otherwise permissible market making and underwriting;
• Narrow the definition of covered fund to capture only those which the statute meant to capture and provide clear exclusions from the covered fund definition for non-U.S. retail funds, debt securitizations, family wealth vehicles, customer-facing transaction structures, TOBs and other similar financing vehicles, and other similar entities that should not be covered funds;
• Revise the regulatory definition of the term “covered transaction” for purposes of Super 23A;
• Simplify the prescriptive compliance obligations of the proprietary trading and covered fund provisions and eliminate the quantitative metrics regime;
• Eliminate the additional restrictions that apply to underwriting, market-making, and risk-mitigating hedging in covered fund ownership interests; and
• Require the Volcker Agencies to more formally coordinate interpretation and examination of the Volcker Rule, with one agency taking the lead.

SIFMA’s letter with recommendations in full is available here: https://www.sifma.org/resources/submissions/response-to-occ-request-for-comment-on-the-volcker-rule/

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SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.