The proposals are named after their creator, former Federal Reserve Chairman Paul Volcker. As part of the Dodd-Frank Act, Congress adopted a ban on proprietary trading and restricted investment in hedge funds and private equity by commercial banks and their affiliates, the so-called “Volcker Rule.”
The newly created Financial Stability Oversight Council (FSOC) and the Federal Reserve Bank (FRB) are responsible for writing the regulations that will enforce this legislation. The first step in the rulemaking process for the Volcker Rule is for the FSOC to complete a study of the legislation and make recommendations to the FRB, Federal Depository Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC).
Institutions have a seven year timeframe to become compliant with the final regulations.