Document ID: SEC-2019-0100-0001
Agency: sec
Document Type: Proposed Rule
Title: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds
Posted Date: 2019-02-08T05:00Z

[Federal Register Volume 84, Number 27 (Friday, February 8, 2019)]
[Proposed Rules]
[Pages 2778-2791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00797]

 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 84, No. 27 / Friday, February 8, 2019 / 
Proposed Rules  

[[Page 2778]]

DEPARTMENT OF TREASURY

Office of the Comptroller of the Currency

12 CFR Part 44

[Docket No. OCC-2018-0029]
RIN 1557-AE47
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FEDERAL RESERVE SYSTEM

12 CFR Part 248

[Docket No. R-1643]
RIN 7100-AF 33
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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 351

RIN 3064-AE88
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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 75

RIN 3038-AE72
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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 255

[Release no. BHCA-5; File no. S7-30-18]
RIN 3235-AM43

Proposed Revisions to Prohibitions and Restrictions on 
Proprietary Trading and Certain Interests In, and Relationships With, 
Hedge Funds and Private Equity Funds

AGENCY: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Securities and Exchange 
Commission (SEC); and Commodity Futures Trading Commission (CFTC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, SEC, and CFTC (individually, an Agency, 
and collectively, the Agencies) are inviting comment on a proposal to 
amend the regulations implementing the Bank Holding Company Act's (BHC 
Act) prohibitions and restrictions on proprietary trading and certain 
interests in, and relationships with, hedge funds and private equity 
funds in a manner consistent with the statutory amendments made 
pursuant to certain sections of the Economic Growth, Regulatory Relief, 
and Consumer Protection Act. The statutory amendments exclude from 
these restrictions certain firms that have total consolidated assets 
equal to $10 billion or less and total trading assets and liabilities 
equal to five percent or less of total consolidated assets and amend 
the restrictions applicable to the naming of a hedge fund or private 
equity fund to permit an investment adviser that is a banking entity to 
share a name with the fund under certain circumstances.

DATES: Comment date: Comments must be received on or before March 11, 
2019. Comments on the Paperwork Reduction Act burden estimates must be 
received on or before April 9, 2019.

ADDRESSES: Interested parties are encouraged to submit written comments 
jointly to all of the Agencies. Commenters are encouraged to use the 
title ``Proposed Revisions to Restrictions on Proprietary Trading and 
Certain Interests in, and Relationships with, Hedge Funds and Private 
Equity Funds'' to facilitate the organization and distribution of 
comments among the Agencies. Commenters are also encouraged to identify 
the number of the specific question for comment to which they are 
responding. Comments should be directed to:
    OCC: You may submit comments to the OCC by any of the methods set 
forth below. Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Proposed Revisions to Prohibitions and Restrictions on Proprietary 
Trading and Certain Interests in, and Relationships with, Hedge Funds 
and Private Equity Funds'' to facilitate the organization and 
distribution of the comments. You may submit comments by any of the 
following methods:
     Federal eRulemaking Portal--``regulations.gov'': Go to 
www.regulations.gov. Enter ``Docket ID OCC-2018-0029'' in the Search 
Box and click ``Search.'' Click on ``Comment Now'' to submit public 
comments.
     Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov, including instructions for 
submitting public comments.
     Email: regs.comments@occ.treas.gov.
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2018-0029'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information that you provide such as name and address 
information, email addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not include any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically: Go to 
www.regulations.gov. Enter ``Docket ID OCC-2018-0029'' in the Search 
box and click ``Search.'' Click on ``Open Docket Folder'' on the right 
side of the screen. Comments and supporting materials can be viewed and 
filtered by clicking on ``View all documents and comments in this 
docket'' and then using the filtering tools on the left side of the 
screen.
     Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov. The docket may be viewed 
after the

[[Page 2779]]

close of the comment period in the same manner as during the comment 
period.
     Viewing Comments Personally: You may personally inspect 
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For 
security reasons, the OCC requires that visitors make an appointment to 
inspect comments. You may do so by calling (202) 649-6700 or, for 
persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and submit to security screening in order to 
inspect comments.
    Board: You may submit comments, identified by [Docket No. R-1643; 
RIN 7100-AF 33], by any of the following methods:
     Agency Website: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: regs.comments@federalreserve.gov. Include docket 
and RIN numbers in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Ann E. Misback, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue NW, 
Washington, DC 20551. All public comments will be made available on the 
Board's website at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or 
to remove personally identifiable information at the commenter's 
request. Accordingly, comments will not be edited to remove any 
identifying or contact information. Public comments may also be viewed 
electronically or in paper in Room 3515, 1801 K Street NW (between 18th 
and 19th Streets NW), between 9:00 a.m. and 5:00 p.m. on weekdays.
    FDIC: You may submit comments, identified by [RIN 3064-AE88] by any 
of the following methods:
     Agency Website: https://www.FDIC.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on 
the Agency website.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th 
Street NW, Washington, DC 20429.
     Hand Delivered/Courier: Comments may be hand-delivered to 
the guard station at the rear of the 550 17th Street NW, building 
(located on F Street) on business days between 7:00 a.m. and 5:00 p.m.
     Email: comments@FDIC.gov. Include the [RIN 3064-AE88] on 
the subject line of the message.
     Public Inspection: All comments received must include the 
agency name and [RIN 3064-AE88] for this rulemaking. All comments 
received will be posted without change to http://www.fdic.gov/regulations/laws/federal/, including any personal information provided. 
Paper copies of public comments may be ordered from the FDIC Public 
Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, 
VA 22226 or by telephone at (877) 275-3342 or (703) 562-2200.
    SEC: You may submit comments by the following methods:

Electronic Comments

     Use the SEC's internet comment form (http://www.sec.gov/rules/proposed.shtml); or Send an email to rule-comments@sec.gov. 
Please include [File Number S7-30-18] on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to [File Number S7-30-18]. This file 
number should be included on the subject line if email is used. To help 
us process and review your comments more efficiently, please use only 
one method. The SEC will post all comments on the SEC's website (http://www.sec.gov/rules/proposed.shtml). Comments are also available for 
website viewing and printing in the SEC's Public Reference Room, 100 F 
Street NE, Washington, DC 20549, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted 
without change. Persons submitting comments are cautioned that the SEC 
does not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly.
    Studies, memoranda, or other substantive items may be added by the 
SEC or SEC staff to the comment file during this rulemaking. A 
notification of the inclusion in the comment file of any materials will 
be made available on the SEC's website. To ensure direct electronic 
receipt of such notifications, sign up through the ``Stay Connected'' 
option at www.sec.gov to receive notifications by email.
    CFTC: You may submit comments, identified by [RIN 3038-AE72] and 
``Proposed Revisions to Prohibitions and Restrictions on Proprietary 
Trading and certain Interests in, and Relationships with, Hedge Funds 
and Private Equity Funds,'' by any of the following methods:
     Agency Website: https://comments.cftc.gov. Follow the 
instructions on the website for submitting comments.
     Mail: Send to Christopher Kirkpatrick, Secretary, 
Commodity Futures Trading Commission, 1155 21st Street, NW, Washington, 
DC 20581.
     Hand Delivery/Courier: Same as Mail above.
    Please submit your comments using only one method. All comments 
must be submitted in English, or if not, accompanied by an English 
translation. Comments will be posted as received to www.cftc.gov and 
the information you submit will be publicly available. If, however, you 
submit information that ordinarily is exempt from disclosure under the 
Freedom of Information Act, you may submit a petition for confidential 
treatment of the exempt information according to the procedures set 
forth in CFTC Regulation 145.9.1. The CFTC reserves the right, but 
shall have no obligation, to review, pre-screen, filter, redact, refuse 
or remove any or all of your submission from www.cftc.gov that it may 
deem to be inappropriate for publication, such as obscene language. All 
submissions that have been redacted or removed that contain comments on 
the merits of the rulemaking will be retained in the public comment 
file and will be considered as required under the Administrative 
Procedure Act and other applicable laws, and may be accessible under 
the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Roman Goldstein, Risk Specialist, Treasury and Market Risk 
Policy, 202-649-6360; Tabitha Edgens, Senior Attorney; Mark O'Horo, 
Attorney, Chief Counsel's Office, (202) 649-5510; for persons who are 
deaf or hearing impaired, TTY, (202) 649-5597, Office of the 
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
    Board: Page Conkling, Senior Supervisory Financial Analyst, (202) 
912-4647, Kevin Tran, Supervisory Financial Analyst, (202) 452-2309, 
Amy Lorenc, Financial Analyst, (202) 452-5293, David Lynch, Deputy 
Associate Director, (202) 452-2081, David McArthur, Senior Economist, 
(202) 452-2985, Division of Supervision and Regulation; Flora Ahn, 
Special Counsel, (202) 452-2317, Gregory Frischmann, Senior Counsel, 
(202) 452-2803, or Kirin Walsh, Attorney, (202) 452-3058, Legal 
Division, Board of Governors of

[[Page 2780]]

the Federal Reserve System, 20th and C Streets NW, Washington, DC 
20551. For the hearing impaired only, Telecommunication Device for the 
Deaf (TDD), (202) 263-4869.
    FDIC: Bobby R. Bean, Associate Director, bbean@fdic.gov, Andrew D. 
Carayiannis, Senior Policy Analyst, acarayiannis@fdic.gov, or Brian 
Cox, Capital Markets Policy Analyst, brcox@fdic.gov, Capital Markets 
Branch, (202) 898-6888; Michael B. Phillips, Counsel, 
mphillips@fdic.gov, Benjamin J. Klein, Counsel, bklein@fdic.gov, or 
Annmarie H. Boyd, Counsel, aboyd@fdic.gov, Legal Division, Federal 
Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 
20429.
    SEC: Andrew R. Bernstein, Senior Special Counsel, Sam Litz, 
Attorney-Adviser, Aaron Washington, Special Counsel, Elizabeth Sandoe, 
Senior Special Counsel, Carol McGee, Assistant Director, or Josephine 
J. Tao, Assistant Director, at (202) 551-5777, Office of Derivatives 
Policy and Trading Practices, Division of Trading and Markets, and 
Nicholas Cordell, Senior Counsel, Matthew Cook, Senior Counsel, Aaron 
Gilbride, Branch Chief, Brian McLaughlin Johnson, Assistant Director, 
and Sara Cortes, Assistant Director, at (202) 551-6787 or 
IArules@sec.gov, Division of Investment Management, U.S. Securities and 
Exchange Commission, 100 F Street NE, Washington, DC 20549.
    CFTC: Cantrell Dumas, Special Counsel, (202) 418-5043, 
cdumas@cftc.gov; Jeffrey Hasterok, Data and Risk Analyst, (646) 746-
9736, jhasterok@cftc.gov, Division of Swap Dealer and Intermediary 
Oversight; Mark Fajfar, Assistant General Counsel, (202) 418-6636, 
mfajfar@cftc.gov, Office of the General Counsel; Stephen Kane, Research 
Economist, (202) 418-5911, skane@cftc.gov, Office of the Chief 
Economist; Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 13 of the Bank Holding Company Act of 1956 (``BHC 
Act''),\1\ also known as the Volcker Rule, 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, subject to 
certain exemptions.\2\
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    \1\ 12 U.S.C. 1851. The Dodd-Frank Wall Street Reform and 
Consumer Protection Act (the Dodd-Frank Act) was enacted on July 21, 
2010. Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010). Section 619 of the Dodd-
Frank Act added a new section 13 to the Bank Holding Company Act of 
1956.
    \2\ See 12 U.S.C. 1851.
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    Under the statute, authority for developing and adopting 
regulations to implement the prohibitions and restrictions of section 
13 of the BHC Act is shared among the Agencies.\3\ The Agencies adopted 
final rules implementing section 13 of the BHC Act in December 2013.\4\ 
The Agencies recently proposed amendments to these rules to provide 
clarity about what activities are prohibited and to improve supervision 
and implementation of section 13 of the BHC Act.\5\
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    \3\ See 12 U.S.C. 1851(b)(2). Under section 13(b)(2)(B) of the 
BHC Act, rules implementing section 13's prohibitions and 
restrictions must be issued by: (i) The appropriate Federal banking 
agencies (i.e., the Board, the OCC, and the FDIC), jointly, with 
respect to insured depository institutions; (ii) the Board, with 
respect to any company that controls an insured depository 
institution, or that is treated as a bank holding company for 
purposes of section 8 of the International Banking Act, any nonbank 
financial company supervised by the Board, and any subsidiary of any 
of the foregoing (other than a subsidiary for which an appropriate 
Federal banking agency, the SEC, or the CFTC is the primary 
financial regulatory agency); (iii) the CFTC with respect to any 
entity for which it is the primary financial regulatory agency, as 
defined in section 2 of the Dodd-Frank Act; and (iv) the SEC with 
respect to any entity for which it is the primary financial 
regulatory agency, as defined in section 2 of the Dodd-Frank Act. 
See id.
    \4\ See ``Prohibitions and Restrictions on Proprietary Trading 
and Certain Interests in, and Relationships with, Hedge Funds and 
Private Equity Funds; Final Rule,'' 79 FR 5535 (Jan. 31, 2014) (the 
``2013 final rule'').
    \5\ See ``Proposed Revisions to Prohibitions and Restrictions on 
Proprietary Trading and Certain Interests in, and Relationships 
With, Hedge Funds and Private Equity Funds,'' 83 FR 33432 (July 17, 
2018).
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II. Recently Enacted Statutory Revisions to the Volcker Rule

    The Economic Growth, Regulatory Relief, and Consumer Protection Act 
(EGRRCPA), enacted on May 24, 2018, amended section 13 of the BHC Act 
by modifying the definition of ``banking entity,'' to exclude certain 
small firms from section 13's restrictions and by permitting a banking 
entity to share a name with a hedge fund or private equity fund that it 
organizes and offers under certain circumstances.\6\
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    \6\ See Economic Growth, Regulatory Relief, and Consumer 
Protection Act, Pub. L. 115-174, sections 203, 204 (May 24, 2018). 
These provisions were effective upon EGRRCPA's enactment.
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    The Agencies are proposing to amend the regulations implementing 
section 13 of the BHC Act in a manner consistent with the statutory 
amendments made by EGRRCPA.

A. Definition of Banking Entity

    Prior to the enactment of EGRRCPA, the definition of ``banking 
entity,'' for purposes of section 13 of the BHC Act, included any 
insured depository institution, as defined in the Federal Deposit 
Insurance Act (FDI Act),\7\ any company that controls an insured 
depository institution, or that is treated as a bank holding company 
for purposes of section 8 of the International Banking Act of 1978 
(IBA), and any affiliate or subsidiary of such entity (excluding from 
the term insured depository institution certain insured depository 
institutions that function solely in a trust or fiduciary capacity, 
subject to a variety of conditions).\8\
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    \7\ Section 3(c)(2) of the FDI Act defines an insured depository 
institution to include any bank or savings association the deposits 
of which are insured by the FDIC under the FDI Act. 12 U.S.C. 
1813(c)(2).
    \8\ 12 U.S.C. 1813(c)(2), 1851(h)(1).
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    EGRRCPA modifies the scope of the term ``banking entity'' to 
exclude certain community banks and their affiliates. Therefore, an 
insured depository institution and its affiliates generally are not 
``banking entities'' if each affiliated insured depository institution 
meets the statutory exclusion.\9\ However, EGRRCPA did not amend the 
definition of ``banking entity'' as it relates to a company that is 
treated as a bank holding company for purposes of section 8 of the IBA. 
Therefore, the statutory exclusion does not apply to a foreign banking 
organization with a U.S. branch or agency, which continues to be 
subject to the prohibitions in section 13 of the BHC Act.
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    \9\ Economic Growth, Regulatory Relief, and Consumer Protection 
Act, Public Law 115-174, sections 203, 204 (May 24, 2018). Section 
203 amended section 13(h)(1)(B) of the BHC Act to narrow the scope 
of the term ``banking entity'' by excluding certain institutions 
from the term ``insured depository institution'' exclusively for the 
purposes of section 13. Insured banks and savings associations that 
qualify for this exclusion for the purposes of section 13 of the BHC 
Act remain insured depository institutions under section 3(c)(2) of 
the FDI Act. Additionally, an institution that meets the criteria to 
be excluded from the definition of insured depository institution 
under EGRRCPA may still be a banking entity by virtue of its 
affiliation with another insured depository institution or a company 
that is treated as a bank holding company under section 8 of the 
IBA.
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    Pursuant to Section 203 of EGRRCPA, the term ``insured depository 
institution'' does not include an institution that does not have, and 
is not controlled by a company that has: (i) More than $10 billion in 
total consolidated assets; and (ii) total trading assets and trading 
liabilities, as reported on the most recent applicable regulatory 
filing filed by the institution, that are more than 5 percent of total 
consolidated assets. Consistent with the

[[Page 2781]]

statute, the Agencies are proposing to modify the definition of 
``insured depository institution'' in Sec.  __.2(r) of the 2013 final 
rule in order to conform that definition with Section 203 of EGRRCPA. 
Under the proposal, an insured depository institution would need to 
satisfy two conditions to qualify for the exclusion from the definition 
of ``banking entity.'' First, the insured depository institution, and 
every entity that controls it, must have total consolidated assets 
equal to or less than $10 billion. Second, total consolidated trading 
assets and liabilities of the insured depository institution, and every 
entity that controls it, must be equal to or less than five percent of 
its total consolidated assets.
    As described above, the exclusion would be available only if both 
the threshold regarding total consolidated assets and the threshold 
regarding total consolidated trading assets and liabilities are not 
exceeded. The Agencies believe that insured depository institutions 
that qualify for the exclusion in this proposal regularly monitor their 
total consolidated assets and total trading assets and liabilities for 
other purposes. Therefore, the Agencies do not believe that the test 
described above would impose any new burden on banking institutions. 
Rather, the Agencies would expect to use available information, 
including information reported on regulatory reporting forms available 
to each Agency, with respect to whether financial institutions qualify 
for the exclusion described above.

B. Modification of Name-Sharing Restrictions of the Volcker Rule

    Prior to enactment of EGRRCPA, section 13 provided that a banking 
entity (or an affiliate of the banking entity), including an investment 
adviser, that organized and offered a hedge fund or private equity fund 
could not share the same name or a variation of the same name with the 
fund (the name-sharing restriction).\10\ Section 204 of EGRRCPA amended 
section 13 of the BHC Act to permit a hedge fund or private equity fund 
\11\ organized and offered by a banking entity to share the same name 
or a variation of the same name as a banking entity that is an 
investment adviser to the hedge fund or private equity fund, if: (1) 
The investment adviser is not an insured depository institution, a 
company that controls an insured depository institution, or a company 
that is treated as a bank holding company for purposes of section 8 of 
the IBA; \12\ (2) the investment adviser does not share the same name 
or a variation of the same name with any such entities; and (3) the 
name does not contain the word ``bank.''
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    \10\ 12 U.S.C. 1851(d)(1)(G)(vi) (2017).
    \11\ 12 U.S.C. 1851(h)(2). See also 12 CFR 44.10(b); 12 CFR 
248.10(b); 12 CFR 351.10(b); 17 CFR 255.10(b); 17 CFR 75.10(b).
    \12\ 12 U.S.C. 3106.
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    Consistent with the statute, the Agencies are proposing to modify 
the 2013 final rule's name-sharing restriction to conform that 
restriction with Section 204 of EGRRCPA. Under the proposal, a hedge 
fund or private equity fund sponsored by a banking entity would be 
permitted to share the same name or a variation of the same name with a 
banking entity that is an investment adviser to the fund, subject to 
the conditions specified in the statute.\13\ Specifically, these 
conditions would require that the investment adviser is not, and does 
not share the same name (or a variation of the same name) as, an 
insured depository institution, a company that controls an insured 
depository institution, or a company that is treated as a bank holding 
company for purposes of section 8 of the International Banking Act of 
1978.\14\ The third condition--that the name does not contain the word 
``bank''--was included in the name-sharing restriction by Section 204 
of EGRRCPA but already is a condition under the 2013 final rule. 
Accordingly, the Agencies believe no additional modifications to the 
2013 final rule are necessary to reflect this condition.
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    \13\ Economic Growth, Regulatory Relief, and Consumer Protection 
Act, Public Law 115-174, section 204 (May 24, 2018).
    \14\ 12 U.S.C. 1851(d)(1)(G)(vi)(I); 12 U.S.C. 
1851(d)(1)(G)(vi)(II).
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    The proposal would also conform the 2013 final rule to the 
statutory change to the definition of ``sponsor.'' \15\ Pursuant to 
Section 204 of EGRRCPA, the definition of the term ``sponsor'' includes 
a banking entity that shares the same name or a variation of the same 
name with a fund, for corporate, marketing, promotional, or other 
purposes, ``except as permitted under subsection (d)(1)(G)(vi)''--that 
is, except as permitted pursuant to the name-sharing restriction as 
amended by EGRRCPA. Consistent with the statute, the Agencies are 
proposing to modify the definition of ``sponsor'' in Sec.  __.10(d)(9) 
of the 2013 final rule in order to conform that definition with Section 
204 of EGRRCPA.
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    \15\ Economic Growth, Regulatory Relief, and Consumer Protection 
Act, Public Law 115-174, section 204 (May 24, 2018).
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III. Request for Comment

    The Agencies invite comment from all members of the public 
regarding all aspects of the proposal. This request for comment is 
limited to this proposal. The Agencies will carefully consider all 
comments that relate to the proposal. In particular, the Agencies 
invite comment on the following questions:
    Question [__]. Does the proposal provide sufficient clarity for 
firms to determine whether they qualify for the exclusion from the 
``banking entity'' definition? If not, please explain why.
    Question [__]. Does the proposal provide sufficient clarity for 
firms to determine whether a hedge fund or private equity fund 
sponsored by a banking entity is permitted to share the same name or a 
variation of the same name with an affiliated banking entity? If not, 
please explain why.

IV. Administrative Law Matters

A. Paperwork Reduction Act

    Certain provisions of the proposal contain ``collection of 
information'' requirements within the meaning of the Paperwork 
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with 
the requirements of the PRA, the Agencies may not conduct or sponsor, 
and a respondent is not required to respond to, an information 
collection unless it displays a currently valid Office of Management 
and Budget (OMB) control number. The Agencies reviewed and determined 
that the proposal would not change the current reporting, recordkeeping 
or third-party disclosure requirements associated with section 13 of 
the BHC Act under the PRA. However, the proposal would reduce the 
number of respondents for the Board (including OCC-, FDIC-, SEC-, and 
CFTC-supervised institutions under a holding company), FDIC (with 
respect to supervised institutions not under a holding company), and 
OCC (supervised institutions not under a holding company), which will 
be addressed as a nonmaterial change to OMB.

B. Solicitation of Comments on the Use of Plain Language

    Section 722 of the Gramm-Leach Bliley Act \16\ requires the OCC, 
Board, and FDIC (Federal banking agencies) to use plain language in all 
proposed and final rules published after January 1, 2000. The Federal 
banking agencies invite comments on whether there are additional steps 
the Federal banking agencies could take to make the

[[Page 2782]]

proposed rule easier to understand. For example:
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    \16\ Public Law 106-102, section 722, 113 Stat. 1338, 1471, 12 
U.S.C. 4809 (1999).
---------------------------------------------------------------------------

     Have the Agencies presented the material in an organized 
manner that meets your needs? If not, how could this material be better 
organized?
     Are the requirements in the proposal clearly stated? If 
not, how could the proposal be more clearly stated?
     Does the proposal contain language or jargon that is not 
clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the proposal easier to understand? 
If so, what changes to the format would make the proposal easier to 
understand?
     What else could the Agencies do to make the regulation 
easier to understand?

C. Initial Regulatory Flexibility Act Analysis

    The Regulatory Flexibility Act (RFA) \17\ imposes certain 
requirements on agencies regarding any potential significant economic 
impact that a proposal may have on a substantial number of small 
entities. The U.S. Small Business Administration (SBA) establishes size 
standards that define which entities are small businesses for purposes 
of the RFA.\18\ Except as otherwise specified below, the size standard 
to be considered a small business for banking entities subject to the 
proposal is $550 million or less in consolidated assets.\19\ The 
Agencies are separately publishing initial regulatory flexibility 
analyses for the proposals as set forth in this proposal.
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    \17\ 5 U.S.C. 601 et seq.
    \18\ U.S. SBA, Table of Small Business Size Standards Matched to 
North American Industry Classification System Codes, available at 
https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
    \19\ See id. Pursuant to SBA regulations, the asset size of a 
concern includes the assets of the concern whose size is at issue 
and all of its domestic and foreign affiliates. 13 CFR 121.103(6).
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Board
    The Board is providing an initial regulatory flexibility analysis 
with respect to this proposed rule. The RFA requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a substantial number of small entities. In connection with a 
proposed rule, the RFA requires an agency to prepare an Initial 
Regulatory Flexibility Analysis describing the impact of the rule on 
small entities or to certify that the proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
An initial regulatory flexibility analysis must contain (1) a 
description of the reasons why action by the agency is being 
considered; (2) a succinct statement of the objectives of, and legal 
basis for, the proposed rule; (3) a description of, and, where 
feasible, an estimate of the number of small entities to which the 
proposed rule will apply; (4) a description of the projected reporting, 
recordkeeping, and other compliance requirements of the proposed rule, 
including an estimate of the classes of small entities that will be 
subject to the requirement and the type of professional skills 
necessary for preparation of the report or record; (5) an 
identification, to the extent practicable, of all relevant Federal 
rules which may duplicate, overlap with, or conflict with the proposed 
rule; and (6) a description of any significant alternatives to the 
proposed rule which accomplish its stated objectives.
    The Board has considered the potential impact of the proposed rule 
on small entities in accordance with the RFA. Based on its analysis and 
for the reasons stated below, the Board believes that this proposed 
rule will not have a significant economic impact on a substantial 
number of small entities. Nevertheless, the Board is publishing and 
inviting comment on this initial regulatory flexibility analysis. A 
final regulatory flexibility analysis will be conducted after comments 
received during the public comment period have been considered.
    The Board welcomes comment on all aspects of its analysis. In 
particular, the Board requests that commenters describe the nature of 
any impact on small entities and provide empirical data to illustrate 
and support the extent of the impact.
1. Reasons for the Proposal
    As discussed in the SUPPLEMENTARY INFORMATION, the Agencies are 
proposing to revise the regulations implementing section 13 of the BHC 
Act in conformance with the amendments to section 13 implemented by 
EGRRCPA. The proposal would therefore exclude from the definition of 
``banking entity'' certain firms that have total consolidated assets 
equal to $10 billion or less and total trading assets and liabilities 
equal to five percent or less of total consolidated assets. Qualifying 
institutions eligible for this exclusion would consist of state member 
banks, bank holding companies, and savings and loan holding companies 
that meet the eligibility criteria for the exclusion. Such institutions 
would be exempt from the prohibitions and restrictions under section 13 
of the BHC Act.
2. Statement of Objectives and Legal Basis
    As discussed above, the Agencies' objective in proposing amendments 
to the regulations implementing section 13 of the BHC Act is to conform 
the regulations to changes recently implemented by sections 203 and 204 
of EGRRCPA. The Agencies are explicitly authorized under section 
13(b)(2) of the BHC Act to adopt rules implementing section 13.\20\
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    \20\ 12 U.S.C. 1851(b)(2).
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3. Description of Small Entities to Which the Regulation Applies
    The Agencies' proposal would apply to state member banks, bank 
holding companies, and savings and loan holding companies supervised by 
the Board that are small entities for purposes of the RFA.\21\
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    \21\ Under regulations issued by the Small Business 
Administration, a small entity includes a depository institution, 
bank holding company, or savings and loan holding company with total 
assets of $550 million or less and trust companies with total assets 
of $38.5 million or less. As of June 30, 2018, there were 
approximately 3,053 small bank holding companies, 184 small savings 
and loan holding companies, and 541 small state member banks.
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4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    As discussed previously in the Paperwork Reduction Act section, the 
proposal would not change the current reporting, recordkeeping or 
third-party disclosure requirements associated with section 13 of the 
BHC Act under the PRA. However, the proposal would exempt small 
entities supervised by the Board from the reporting, recordkeeping, and 
all other requirements associated with section 13 of the BHC Act.
5. Identification of Duplicative, Overlapping, or Conflicting Federal 
Regulations
    The Board has not identified any federal statutes or regulations 
that would duplicate, overlap, or conflict with the proposed revisions.
6. Discussion of Significant Alternatives
    The Board believes the proposed amendments will not have a 
significant economic impact on small banking entities supervised by the 
Board and therefore believes that there are no significant alternatives 
to the proposal that would reduce the economic impact on small banking 
entities supervised by the Board.
OCC
    The RFA requires an agency, in connection with a proposed rule, to 
prepare an Initial Regulatory Flexibility

[[Page 2783]]

Analysis describing the impact of the proposed rule on small entities, 
or to certify that the proposed rule would not have a significant 
economic impact on a substantial number of small entities. For purposes 
of the RFA, the SBA includes as small entities those with $550 million 
or less in assets for commercial banks and savings institutions, and 
$38.5 million or less in assets for trust companies.
    The OCC currently supervises approximately 886 small entities.\22\
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    \22\ The number of small entities supervised by the OCC is 
determined using the SBA's size thresholds for commercial banks and 
savings institutions, and trust companies, which are $550 million 
and $38.5 million, respectively. Consistent with the General 
Principles of Affiliation 13 CFR 121.103(a), the OCC counts the 
assets of affiliated financial institutions when determining if they 
should classify an OCC-supervised institution as a small entity. The 
OCC used December 31, 2017, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the U.S. Small Business Administration's Table of 
Size Standards.
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    Pursuant to section 203 of EGRRCPA, OCC-supervised institutions are 
not ``banking entities'' within the scope of Section 13 of the BHCA if 
the OCC-supervised institution, and any company that controls the OCC-
supervised institution, meet the statutory exclusion. The EGRRCPA 
statutory provisions took effect upon enactment. Because the statutory 
provisions are already in effect, and this proposal would only revise 
the OCC's existing regulations to conform to this statutory change, 
this proposal would not affect a substantial number of small entities. 
Section 204 of EGRRCPA generally does not apply to OCC-supervised 
institutions.
    The OCC's threshold for a significant effect is whether cost 
increases associated with a proposed rule are greater than or equal to 
either 5 percent of a small bank's total annual salaries and benefits 
or 2.5 percent of a small bank's total non-interest expense. Even if 
the proposal affected a substantial number of small banks, the OCC does 
not believe that the proposal would have a significant economic impact 
on small banks because OCC-supervised institutions that qualify for the 
exclusion under section 203 of the EGRRCPA should not have compliance 
costs associated with 12 CFR part 44. OCC-supervised institutions can 
determine their eligibility for the exclusion at the national bank 
level and federal savings association level on the basis of information 
they are separately required to file in their Consolidated Reports of 
Condition and Income.
    For these reasons, the OCC certifies that the proposal would not 
have a significant economic impact on a substantial number of small 
entities.
FDIC
    The RFA generally requires that, in connection with a proposed 
rulemaking, an agency prepare and make available for public comment an 
initial regulatory flexibility analysis describing the impact of the 
rulemaking on small entities.\23\ A regulatory flexibility analysis is 
not required, however, if the agency certifies that the rule would not 
have a significant economic impact on a substantial number of small 
entities. The SBA has defined ``small entities'' to include banking 
organizations with total assets less than or equal to $550 million.\24\ 
The FDIC supervises 3,575 depository institutions,\25\ of which 2,763 
are defined as small banking entities by the terms of the RFA.\26\ Of 
the 2,763 small, FDIC-supervised institutions, all report having total 
consolidated assets less than or equal to $10 billion, and total 
trading assets and liabilities less than or equal to five percent of 
total consolidated assets, and are therefore, covered by the proposed 
rule.
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    \23\ 5 U.S.C. 601 et seq.
    \24\ The SBA defines a small banking organization as having $550 
million or less in assets, where ``a financial institution's assets 
are determined by averaging the assets reported on its four 
quarterly financial statements for the preceding year.'' 13 CFR 
121.201 n.8 (2018). ``SBA counts the receipts, employees, or other 
measure of size of the concern whose size is at issue and all of its 
domestic and foreign affiliates. . . .'' 13 CFR 121.103(a)(6) 
(2018). Following these regulations, the FDIC uses a covered 
entity's affiliated and acquired assets, averaged over the preceding 
four quarters, to determine whether the covered entity is ``small'' 
for the purposes of RFA.
    \25\ FDIC-supervised institutions are set forth in 12 U.S.C. 
1813(q)(2).
    \26\ Call Report: June 30, 2018.
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    Although the proposed rule would conform the FDIC's regulation to 
the statute in a way that is relevant to 2,763 small, FDIC-supervised 
institutions, the effects of the proposed rule itself would not have a 
significant economic impact. The statutory changes established by 
EGRRCPA enabled certain institutions to engage in proprietary 
trading,\27\ thereby potentially increasing the volume of such activity 
for affected banking entities. The proposed rule would amend the FDIC's 
regulations to conform to this exemption established in EGRRCPA. 
Therefore, this component of the rule would have no direct effect on 
small, FDIC-supervised institutions.
---------------------------------------------------------------------------

    \27\ 12 CFR 351.3(a).
---------------------------------------------------------------------------

    As previously stated, EGRRCPA permits a covered fund organized and 
offered by a banking entity to share the same name, or a variation of 
the same name, as a banking entity that is an affiliated investment 
adviser to the hedge fund or private equity fund, with some 
restrictions. By permitting a covered fund to share the name of a 
banking entity, or variation thereof, the fund can utilize the 
franchise value of the banking entity to more effectively market the 
fund to the bank's current account holders or the public. The size of 
this potential benefit is difficult to accurately estimate with 
available data because it depends on the business model of individual 
banks and funds, the propensity of those funds to advertise to 
particular groups, and the decisions of customers, among other things. 
However, since the proposed rule would conform FDIC regulations with 
the statutory language enacted by EGRRCPA, this component of the 
proposed rule would have no direct effect on small, FDIC-supervised 
institutions.
    Finally, the proposed rule would introduce conforming changes that 
would reduce recordkeeping, reporting, and disclosure costs for 
affected FDIC-supervised institutions. EGRRCPA states that certain 
institutions with total consolidated assets less than or equal to $10 
billion, and total trading assets and liabilities less than or equal to 
five percent of total consolidated assets, are excluded from 
restrictions on engaging in proprietary trading activity. The proposed 
rule would amend the FDIC's regulations to conform to this exclusion 
established in EGRRCPA. In so doing, the proposed rule would make 
conforming changes to reduce the recordkeeping and reporting 
requirements for small, FDIC-supervised institutions that were excluded 
from proprietary trading restriction by EGRRCPA. Although the vast 
majority of small, FDIC-supervised institutions are not currently 
required to comply with the recordkeeping, reporting, or disclosure 
requirements associated with proprietary trading, the proposed rule 
would introduce conforming changes that would exclude some small, FDIC-
supervised institutions. Of these newly excluded institutions, the 
proposed rule would conform the Section 203 of EGRRCPA, which reduced 
recordkeeping, reporting, or disclosure requirements by up to 8 hours 
per institution, or approximately $514.40 per year.28 29 The 
estimated reduction in

[[Page 2784]]

recordkeeping, reporting, or disclosure costs per institution 
represents less than 0.01 percent of non-interest expenses, on average, 
for small, FDIC-supervised institution.\30\ Thus, the FDIC believes the 
proposed rule would not have a significant economic impact on small, 
FDIC-supervised institutions.
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    \28\ 8 hours * $64.30 per hour = $514.40.
    \29\ The estimated reduction in costs is calculated by 
multiplying 8 hours by an estimated total hourly compensation rate 
of $64.30 per hour. According to the May 2017 National Industry-
Specific Occupational Employment and Wage Estimates for the 
Depository Credit Intermediation sector the 75th percentile wages 
for a compliance officer is $40.55 per hour. The wage information 
reported by the BLS in the Specific Occupational Employment and Wage 
Estimates does not include health benefits and other non-monetary 
benefits. According to the March 2018 Employer Cost of Employee 
Compensation data compensation rates for health and other benefits 
are 35.5 percent of total compensation. The wage is also inflation 
adjusted according to the BLS data on the Consumer Price Index for 
Urban Consumers (CPI-U) so that it is contemporaneous with the non-
wage compensation statistic. The inflation rate was 2.28 percent 
between May 2017 and June 2018. Therefore, the adjusted average wage 
for a compliance officer is $64.30 per hour.
    \30\ Call Report, June 30, 2018.
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    For the reasons described above and under section 605(b) of the 
RFA, the FDIC certifies that the proposed rule would not have a 
significant economic impact on a substantial number of small entities.
    The FDIC invites comments on all aspects of the supporting 
information provided in this RFA section. In particular, would this 
rule have any significant effects on small entities that the FDIC has 
not identified?
SEC
    Pursuant to 5 U.S.C. 605(b), the SEC hereby certifies that the 
proposed amendments to the 2013 final rule would not, if adopted, have 
a significant economic impact on a substantial number of small 
entities.
    As discussed in the SUPPLEMENTARY INFORMATION, the Agencies are 
proposing to revise the 2013 final rule in order to be consistent with 
statutory amendments made by EGRRCPA to section 13 of the BHC Act. The 
statutory amendments (a) modified the scope of the term ``banking 
entity'' to exclude certain community banks and their affiliates and 
(b) permitted any banking entity to share a name with a hedge fund or 
private equity fund that it organizes and offers under certain 
circumstances.
    The proposed revisions would generally apply to banking entities, 
including certain SEC-registered entities. These entities include bank-
affiliated SEC-registered broker-dealers, investment advisers, 
security-based swap dealers, and major security-based swap 
participants. Based on information in filings submitted by these 
entities, the SEC preliminarily believes that there are no banking 
entity registered investment advisers,\31\ broker-dealers \32\ 
security-based swap dealers, or major security-based swap participants 
that are small entities for purposes of the RFA.\33\ For this reason, 
the SEC believes that the proposed amendments to the 2013 final rule 
would not, if adopted, have a significant economic impact on a 
substantial number of small entities.
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    \31\ For the purposes of an SEC rulemaking in connection with 
the RFA, an investment adviser generally is a small entity if it: 
(1) Has assets under management having a total value of less than 
$25 million; (2) did not have total assets of $5 million or more on 
the last day of the most recent fiscal year; and (3) does not 
control, is not controlled by, and is not under common control with 
another investment adviser that has assets under management of $25 
million or more, or any person (other than a natural person) that 
had total assets of $5 million or more on the last day of its most 
recent fiscal year. See 17 CFR 275.0-7.
    \32\ For the purposes of an SEC rulemaking in connection with 
the RFA, a broker-dealer will be deemed a small entity if it: (1) 
Had total capital (net worth plus subordinated liabilities) of less 
than $500,000 on the date in the prior fiscal year as of which its 
audited financial statements were prepared pursuant to 17 CFR 
240.17a-5(d), or, if not required to file such statements, had total 
capital (net worth plus subordinated liabilities) of less than 
$500,000 on the last day of the preceding fiscal year (or in the 
time that it has been in business, if shorter); and (2) is not 
affiliated with any person (other than a natural person) that is not 
a small business or small organization. See 17 CFR 240.0-10(c). 
Under the standards adopted by the SBA, small entities also include 
entities engaged in financial investments and related activities 
with $38.5 million or less in annual receipts. See 13 CFR 121.201 
(Subsector 523).
    \33\ Based on SEC analysis of Form ADV data, the SEC 
preliminarily believes that there are not a substantial number of 
registered investment advisers affected by the proposed amendments 
that would qualify as small entities under RFA. Based on SEC 
analysis of broker-dealer FOCUS filings and NIC relationship data, 
the SEC preliminarily believes that there are no SEC-registered 
broker-dealers affected by the proposed amendments that would 
qualify as small entities under RFA. With respect to security-based 
swap dealers and major security-based swap participants, based on 
feedback from market participants and information about the 
security-based swap markets, the Commission believes that the types 
of entities that would engage in more than a de minimis amount of 
dealing activity involving security-based swaps--which generally 
would be large financial institutions--would not be ``small 
entities'' for purposes of the RFA. See Regulation SBSR--Reporting 
and Dissemination of Security-Based Swap Information, 81 FR 53546, 
53553 (Aug. 12, 2016).
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    The SEC encourages written comments regarding this certification. 
Specifically, the SEC solicits comment as to whether the proposed 
amendments could have an impact on small entities that has not been 
considered. Commenters should describe the nature of any impact on 
small entities and provide empirical data to support the extent of such 
impact.
CFTC
    Pursuant to 5 U.S.C. 605(b), the CFTC hereby certifies that the 
proposed amendments to the 2013 final rule would not, if adopted, have 
a significant economic impact on a substantial number of small entities 
for which the CFTC is the primary financial regulatory agency.
    As discussed in this SUPPLEMENTARY INFORMATION, the Agencies are 
proposing to revise the 2013 final rule in order to be consistent with 
statutory amendments made by EGRRCPA to section 13 of the BHC Act. The 
statutory amendments (a) modified the scope of the term ``banking 
entity'' to exclude certain community banks and their affiliates and 
(b) permitted any banking entity to share a name with a hedge fund or 
private equity fund that it organizes and offers under certain 
circumstances.
    The proposed revisions would generally apply to banking entities, 
including certain CFTC-registered entities. These entities include 
bank-affiliated CFTC-registered swap dealers, futures commission 
merchants, commodity trading advisors and commodity pool operators.\34\ 
The CFTC has previously determined that swap dealers, futures 
commission merchants and commodity pool operators are not small 
entities for purposes of the RFA and, therefore, the requirements of 
the RFA do not apply to those entities.\35\ As for commodity trading 
advisors, the CFTC has found it appropriate to consider whether such 
registrants should be deemed small entities for purposes of the RFA on 
a case-by-case basis, in the context of the particular regulation at 
issue.\36\
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    \34\ The proposed revisions may also apply to other types of 
CFTC registrants that are banking entities, such as introducing 
brokers, but the CFTC believes it is unlikely that such other 
registrants will have significant activities that would implicate 
the proposed revisions. See 79 FR 5808, 5813 (Jan. 31, 2014) (CFTC 
version of 2013 final rule).
    \35\ See Policy Statement and Establishment of Definitions of 
``Small Entities'' for Purposes of the Regulatory Flexibility Act, 
47 FR 18618 (Apr. 30, 1982) (futures commission merchants and 
commodity pool operators); Registration of Swap Dealers and Major 
Swap Participants, 77 FR 2613, 2620 (Jan. 19, 2012) (swap dealers 
and major swap participants).
    \36\ See Policy Statement and Establishment of Definitions of 
``Small Entities'' for Purposes of the Regulatory Flexibility Act, 
47 FR 18618, 18620 (Apr. 30, 1982).
---------------------------------------------------------------------------

    In the context of the proposed revisions to the 2013 final rule, 
the CFTC believes it is unlikely that a substantial number of the 
commodity trading advisors that are potentially affected are small 
entities for purposes of the RFA. In this regard, the CFTC notes that 
only commodity trading advisors that are registered with the CFTC are 
covered by the 2013 final rule, and generally those that are registered 
have larger businesses. Similarly, the

[[Page 2785]]

2013 final rule applies to only those commodity trading advisors that 
are affiliated with banks, which the CFTC expects are larger 
businesses. The CFTC requests that commenters address in particular 
whether any of these commodity trading advisors, or other CFTC 
registrants covered by the proposed revisions to the 2013 final rule, 
are small entities for purposes of the RFA.
    Because the CFTC believes that there are not a substantial number 
of registered, banking entity-affiliated commodity trading advisors 
that are small entities for purposes of the RFA, and the other CFTC 
registrants that may be affected by the proposed revisions have been 
determined not to be small entities, the CFTC believes that the 
proposed revisions to the 2013 final rule would not, if adopted, have a 
significant economic impact on a substantial number of small entities 
for which the CFTC is the primary financial regulatory agency.
    The CFTC encourages written comments regarding this certification. 
Specifically, the CFTC solicits comment as to whether the proposed 
amendments could have a direct impact on small entities that were not 
considered. Commenters should describe the nature of any impact on 
small entities and provide empirical data to support the extent of such 
impact.

D. Riegle Community Development and Regulatory Improvement Act

    Pursuant to section 302(a) of the Riegle Community Development and 
Regulatory Improvement Act (RCDRIA),\37\ in determining the effective 
date and administrative compliance requirements for a new regulation 
that imposes additional reporting, disclosure, or other requirements on 
insured depository institutions, each Federal banking agency must 
consider any administrative burdens that such regulation would place on 
insured depository institutions and the benefits of such regulation. In 
addition, section 302(b) of RCDRIA requires such new regulation to take 
effect on the first day of a calendar quarter that begins on or after 
the date on which the regulations are published in final form, with 
certain exceptions.
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 4802(a).
---------------------------------------------------------------------------

    The proposed rule would reduce burden and would not impose any 
reporting, disclosure, or other new requirements on insured depository 
institutions. Accordingly, the Agencies are not required by RCDRIA to 
consider the administrative burdens and benefits of the rule or delay 
its effective date.\38\ Because delaying the effective date of the rule 
is not required and would serve no purpose, the Agencies propose to 
make the threshold increase effective on the first day after 
publication of the final rule in the Federal Register. The Agencies 
invite any comments that would inform the Agencies' consideration of 
RCDRIA.
---------------------------------------------------------------------------

    \38\ Additionally, the 30-day delayed effective date requirement 
under the Administrative Procedure Act is not applicable to a rule, 
such as the one proposed herein, that grants or recognizes an 
exemption or relieves a burden. 5 U.S.C. 553(d)(1).
---------------------------------------------------------------------------

E. OCC Unfunded Mandates Reform Act Determination

    The OCC analyzed the proposed rule under the factors set forth in 
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532). Under this 
analysis, the OCC considered whether the proposed rule includes a 
federal mandate that may result in the expenditure by state, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation).
    The proposed rule does not impose new mandates. Therefore, the OCC 
concludes that implementation of the proposed rule would not result in 
an expenditure of $100 million or more annually by state, local, and 
tribal governments, or by the private sector.

F. SEC: Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, or ``SBREFA,'' \39\ the SEC requests comment on the 
potential effect of the proposed amendments on the U.S. economy on an 
annual basis; any potential increase in costs or prices for consumers 
or individual industries; and any potential effect on competition, 
investment or innovation. Commenters are requested to provide empirical 
data and other factual support for their views to the extent possible.
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    \39\ Public Law 104-121, Title II, 110 Stat. 857 (1996) 
(codified in various sections of 5 U.S.C., 15 U.S.C. and as a note 
to 5 U.S.C. 601).
---------------------------------------------------------------------------

G. SEC Economic Analysis

    The Agencies are proposing amendments to the 2013 final rule to 
implement the statutory mandates of sections 203 and 204 of EGRRCPA. In 
accordance with Section 203 of EGRRCPA,\40\ the proposal would amend 
the definition of ``insured depository institution'' in Sec.  ___.2(r) 
of the 2013 final rule to exclude an institution so long as it, and 
every company that controls it, has both (1) $10 billion or less in 
total consolidated assets and (2) total consolidated trading assets and 
liabilities that are 5 percent or less of total consolidated assets. 
The proposal would also amend the 2013 final rule to reflect the 
changes made by Section 204 of EGRRCPA. That provision modified section 
13 of the BHC Act to permit, in certain circumstances, bank-affiliated 
investment advisers to share their name with the hedge funds or private 
equity funds they organize and offer.
---------------------------------------------------------------------------

    \40\ Specifically, Section 203 of EGRRCPA provides that the term 
``insured depository institution,'' for purposes of the definition 
of ``banking entity'' in section 13(h)(1) of the BHC Act (12 U.S.C. 
1851(h)(1)), does not include an insured depository institution that 
does not have, and is not controlled by a company that has: (1) More 
than $10 billion in total consolidated assets; and (2) total trading 
assets and trading liabilities, as reported on the most recent 
applicable regulatory filing filed by the institution, that are more 
than 5 percent of total consolidated assets.
---------------------------------------------------------------------------

    The amendments to the 2013 final rule would reflect the statutory 
provisions of EGRRCPA that are already in effect, and we preliminarily 
believe that market participants are already responding to the 
statutory changes. Thus, the baseline against which we are assessing 
the effects of these proposed amendments incorporates both: (i) The 
enacted statutory provisions of sections 203 and 204 of EGRRCPA, and 
(ii) our understanding that banking entities with both total 
consolidated assets of $10 billion or less and total consolidated 
trading assets and liabilities that are 5 percent or less of total 
consolidated assets are, consistent with EGRRCPA, no longer complying 
with the 2013 final rule. Any costs, benefits, and economic effects of 
the proposed amendments, including those on efficiency, competition, 
and capital formation, stem entirely from these statutory provisions 
and not from the conforming amendments to the 2013 final rule.\41\
---------------------------------------------------------------------------

    \41\ Because EGRRCPA was enacted recently, the economic effects 
of sections 203 and 204 may not yet be fully realized in the 
relevant securities markets.
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    The SEC is mindful of the costs and benefits imposed by its rules. 
Certain SEC-regulated entities, such as broker-dealers (``BDs'') and 
registered investment advisers (``RIAs''), that fell under the 
definition of ``banking entity'' for the purposes of the Volcker Rule 
before the enactment of EGRRCPA are within the scope of the proposed 
amendments implementing sections 203 and 204 of EGRRCPA.\42\ We 
estimate

[[Page 2786]]

that there are as many as 126 bank-affiliated BDs with aggregate assets 
of approximately $126.2 billion and aggregate holdings of approximately 
$12.3 billion that are within the scope of these proposed 
amendments.\43\ We estimate that, at most, 308 bank-affiliated RIAs 
could be affected by the proposed amendments.\44\
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    \42\ We believe that all bank-affiliated entities that may 
register with the SEC as security-based swap dealers and major 
security-based swap participants are unaffected by the amendments 
due to the size of the balance sheet and the amount of trading 
activity of their affiliated banking entities. Our analysis is based 
on DTCC Derivatives Repository Limited Trade Information Warehouse 
data on single-name credit-default swaps. Throughout this economic 
analysis, the term ``banking entity'' generally refers only to 
banking entities that are subject to the Volcker Rule and for which 
the SEC is the primary financial regulatory agency as defined in 
section 2(12)(B) of the Dodd-Frank Act. See 12 U.S.C. 1851(b)(2); 12 
U.S.C. 5301(12)(B). In addition, the use of the term ``we'' 
throughout this economic analysis refers only to the SEC and not to 
the other Agencies, except where otherwise indicated.
    \43\ These 126 broker-dealers are affiliated with 111 banks or 
bank holding companies. This estimate has been revised since the 
July 2018 release proposing amendments to the Volcker Rule based on 
a manual reclassification of the number of entities affected by 
EGRRCPA. This estimate includes broker-dealers for which data on 
total assets and/or trading assets and liabilities are not 
available. Based on a manual search of regulatory filings for 
holding companies with missing assets and liabilities data and 
current FR Y-9C and FR Y-9SP reporting requirements, we believe that 
entities with missing data have low levels of trading activity and 
are likely affected by section 203 of EGRRCPA. To the degree that 
this may not be the case for some bank-affiliated broker-dealers, 
these figures may overestimate the number of affected entities. 
Broker-dealer holdings are estimated based on FOCUS reports data and 
defined as securities and spot commodities owned at market value, 
including: Bankers' acceptances, certificates of deposit and 
commercial paper, state and municipal government obligations, 
corporate obligations, stocks and warrants, options, arbitrage, 
other securities, U.S. and Canadian government obligations, and spot 
commodities.
    \44\ As estimated in the July 2018 release proposing amendments 
to the Volcker Rule (83 FR at 33525), there are, approximately, 308 
bank-affiliated RIAs. We do not have information or data that would 
allow us to estimate how many of these bank-affiliated RIAs would 
have preferred to share a name with funds they advise. For the 
purposes of this analysis, we estimate that these 308 banking-entity 
RIAs and 126 bank-affiliated BDs are also the SEC-regulated entities 
that may be able to engage in covered fund activities as a result of 
section 203 of EGRRCPA. We do not have information or data that 
would allow us to estimate how many of these entities would have 
preferred to engage in covered fund activities.
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    The statutory exemption in section 203 of EGRRCPA provided entities 
thereby excluded from the Volcker Rule with greater flexibility in 
pursuing certain types of trading and covered fund activities that 
could be profitable and, thus, may have enhanced their profitability. 
To the extent that the compliance costs related to the Volcker Rule 
would otherwise have been passed along to clients and counterparties of 
the affected entities, the cost reductions associated with section 203 
of EGRRCPA may be flowing through to counterparties and clients in the 
form of reduced transaction costs and increased willingness to engage 
in trading activity, including intermediation that facilitates risk-
sharing, as well as covered fund activities.\45\ Additionally, to the 
extent that the Volcker Rule may have reduced the ability or 
willingness of affected entities to engage in permitted hedging, 
underwriting or market-making due to compliance costs, the statutory 
exemption may have facilitated access to capital and trading activity. 
The costs of the 2013 final rule will no longer apply to the entities 
affected by the statutory exemption, which, as discussed above, is 
already fully in effect.\46\
---------------------------------------------------------------------------

    \45\ See 79 FR 5778 for the Agencies' estimated ongoing 
compliance and recordkeeping burdens related to the requirements of 
the 2013 final rule.
    \46\ Based on the hourly burdens estimated in the release 
adopting the 2013 final rule (79 FR at 5778) and the BD weight 
estimates in the July 2018 release proposing amendments to the 
Volcker Rule (83 FR at 33539), annual compliance cost savings for 
SEC-regulated entities due to section 203 of EGRRCPA may be as high 
as approximately $16,626,385 (= 2,035 hours x 0.18 x (Attorney at 
$409 per hour) x 111).
---------------------------------------------------------------------------

    Some entities with $10 billion or less in total consolidated assets 
and trading assets and liabilities equal to or less than 5 percent of 
its total consolidated assets may have responded to the statutory 
exemption by increasing or planning to increase their trading activity 
and covered funds activities, while still remaining under the 
applicable thresholds at the consolidated holding company level. We 
estimate that 23 such holding companies with broker-dealer affiliates 
and available information about trading assets and liabilities have, on 
aggregate, total consolidated assets of approximately $94.9 billion and 
gross consolidated trading assets and liabilities of approximately $0.6 
billion.\47\ Although we do not have information about the remaining 
holding companies, we know that 111 parent firms with affiliated 
broker-dealers can have, on aggregate, total gross consolidated trading 
assets and liabilities of no more than $55.5 billion without exceeding 
either threshold and becoming subject to the Volcker Rule. Therefore, 
we estimate that aggregate trading assets and liabilities of the 
affected holding companies with SEC-regulated affiliates that would not 
result in any of these companies becoming subject to the Volcker Rule 
is likely no more than $54.9 billion.\48\ We note that, if an increase 
in risk-taking by affected entities is observed by market participants 
that provide capital to them, these capital providers may demand 
additional compensation for bearing more financial risk, which may 
decrease the profitability of the entity's trading and covered fund 
activities.
---------------------------------------------------------------------------

    \47\ The current FR Y-9C and FR Y-9SP filing requirements limit 
data availability and, due to data completeness and delays, we base 
estimates on filings for the third quarter of 2017. We have 
information about trading assets and liabilities of 23 holding 
companies with 24 broker-dealer affiliates.
    \48\ This figure is calculated as follows: $55.5 bln--$0.6 bln = 
$54.9 bln. We recognize that these estimates may under- or 
overestimate the increases in trading activity that may occur as a 
result of section 203 of EGRRCPA for four primary reasons. First, 
the profitability of trading activity is likely to strongly 
influence incentives to engage in trading activity and may vary 
depending on trading strategy, market sector, and time period 
measured. Second, growth in a holding company's total consolidated 
assets is influenced by business models, prevailing market 
conditions, industry competition, bank merger and acquisition 
activity, among other factors. Third, this estimate assumes that no 
affected entity will enter or exit the industry as a result of the 
statutory exclusion. Fourth, this estimate assumes for purposes of 
this economic analysis that small holding companies that file form 
FR Y-9SP, which does not contain data on trading assets and 
liabilities, do not currently have any trading assets or 
liabilities.
---------------------------------------------------------------------------

    Banking entities with more than $10 billion in total consolidated 
assets and/or trading assets and liabilities greater than 5 percent of 
total consolidated assets are incentivized to shrink their balance 
sheets or trading activity under the thresholds.\49\ This may reduce 
the willingness of such banking entities to serve as intermediaries. At 
the same time, because the statutory exemption incentivizes such 
banking entities to have smaller balance sheets and trading books, 
section 203 may have reduced the potential for market impacts from the 
failure of a given entity. On aggregate, potential decreases in the 
balance sheets and trading activity of unaffected banking entities may 
partly offset increases in balance sheets and trading activity of 
affected entities. To the degree that statutory changes in section 203 
of EGRRCPA increase the gross volume of trading assets and liabilities, 
there may be an increase in risk-taking. However, this need not always 
be the case. For example, a hedging transaction that offsets a risk 
exposure from an existing asset would increase the reported gross 
trading assets and liabilities without necessarily producing a net 
increase in risk exposure. We note that the affected bank-affiliated 
BDs account only for approximately 3.2% of aggregate BD assets and 
1.24% of aggregate BD holdings. Thus, the statutory exemption affects 
only a small fraction of the broker-dealer industry. Nevertheless, even 
in the absence of significant aggregate effects, both the risks and the 
returns from newly permissible trading and covered fund activity by 
individual

[[Page 2787]]

BDs are likely to be passed along to their investors and customers.
---------------------------------------------------------------------------

    \49\ The extent to which this happens will depend on the size 
and complexity of each banking entity's trading activities and 
organizational structure, along with those of its affiliated 
entities and the magnitude of expected compliance savings from not 
being subject to the Volcker Rule.
---------------------------------------------------------------------------

    Potential shifts in risk-taking attributable to the statutory 
changes contained in section 203 of EGRRCPA and discussed above may 
result in two competing effects. On the one hand, if affected entities 
are now able to bear risk at a lower cost than their customers, 
increased risk-taking could promote secondary market trading activity 
and capital formation in primary markets, and thus increase access to 
capital for issuers. Similarly, the statutory exemption may increase 
banking entities' covered fund activities, which may broaden investment 
opportunities for investors in covered funds and facilitate access to 
capital by companies in which those funds invest. On the other hand, 
the statutory exemption may increase risk-taking by individual SEC-
regulated entities, the amount of covered fund activity in which they 
engage, as well as total risk in the financial system, which may 
ultimately negatively impact issuers and investors. However, as noted 
above, the maximum potential increase in aggregate trading activity of 
affected entities that would not trigger Volcker Rule compliance is 
likely limited to $54.9 billion. We continue to recognize that, if 
observed by providers of capital, an increase in risk-taking by 
affected entities may increase their cost of capital and reduce the 
profitability of such risk-taking.
    Entities exempt from the Volcker Rule under EGRRCPA are no longer 
required to incur related compliance costs and may, thus, have a 
competitive advantage relative to similarly situated entities just 
above the thresholds. This may incentivize entities above the 
thresholds to decrease the size of their balance sheet, trading 
activity, or both in order to become exempt from the Volcker Rule, 
resulting in greater competition between entities with consolidated 
assets and trading assets and liabilities near the thresholds. 
Moreover, section 203 of EGRRCPA may have placed affected domestic 
entities on a more even competitive footing with foreign firms that are 
also not subject to the substantive prohibitions and compliance costs 
related to the Volcker Rule and its implementing regulations. In 
addition, it may have placed affected domestic entities in a 
potentially better competitive position relative to foreign banking 
entities that are subject to the Volcker Rule but may avail themselves 
of the exemptions related to activity outside of the United States.\50\
---------------------------------------------------------------------------

    \50\ See Sec. Sec.  ___.6(e) and ___.13(b) of the 2013 final 
rule; See 12 U.S.C. 1851(d)(1)(H) and (I) (2017).
---------------------------------------------------------------------------

    Prior to the enactment of EGRRCPA, a banking-entity RIA could not 
share the same name or a variation of the same name as a hedge fund or 
private equity fund that it organized and offered under an exemption in 
the Volcker Rule.\51\ Section 204 of EGRRCPA changed this condition for 
banking-entity RIAs that meet certain requirements and provided them 
with flexibility in name sharing for corporate, marketing, promotional, 
or other purposes. To the extent that name sharing effectively and 
easily conveys the identity of a fund's RIA and preserves the brand 
value, section 204 of EGRRCPA improved bank-affiliated RIAs' ability to 
compete for investor capital with RIAs that are not affiliated with 
banks. Section 204 also provided bank-affiliated RIAs that can share a 
name with a fund with a competitive advantage over those bank-
affiliated RIAs that cannot share a name with a fund because they do 
not meet the statutory conditions for name sharing. In addition, the 
statutory name-sharing provision may have made it easier for some 
investors to identify the adviser of a fund, which may have reduced 
search costs related to the capital allocation process for some 
investors.
---------------------------------------------------------------------------

    \51\ See Sec.  _.11 of the 2013 final rule; 12 U.S.C. 
1851(d)(1)(G) (2017).
---------------------------------------------------------------------------

    We reiterate that the economic effects discussed above stem from 
the statutory provisions of EGRRCPA that are fully in effect, and, 
therefore, we believe that these effects may be already partially 
realized. We believe that the conforming amendments to the implementing 
regulations will have no additional costs, benefits, or effects on 
efficiency, competition, and capital formation.
    As discussed above, the proposed amendments conform the regulations 
implementing section 13 of the BHC Act with the statutory amendments 
made pursuant to sections 203 and 204 of EGRRCPA with no exercise of 
agency discretion. As such, we believe there are no reasonable 
alternatives to the proposed rules.
Request for Comment
    The SEC requests comment on all aspects of the economic analysis of 
the proposed amendments. In particular, the SEC asks commenters to 
consider the following question:
    1. Has the SEC accurately characterized the baseline, costs, 
benefits, and effects on competition, efficiency, and capital formation 
of the proposed amendments and alternatives with respect to SEC-
regulated entities and securities markets? If not, why not? Should any 
of the costs or benefits be modified? What, if any, other costs or 
benefits should the SEC take into account? Please provide quantitative 
information and ways of estimating any of the costs and benefits 
associated with the proposed amendments.

List of Subjects

12 CFR Part 44

    Banks, Banking, Compensation, Credit, Derivatives, Government 
securities, Insurance, Investments, National banks, Penalties, 
Reporting and recordkeeping requirements, Risk, Risk retention, 
Securities, Trusts and trustees.

12 CFR Part 248

    Administrative practice and procedure, Banks, Banking, Conflict of 
interests, Credit, Foreign banking, Government securities, Holding 
companies, Insurance, Insurance companies, Investments, Penalties, 
Reporting and recordkeeping requirements, Securities, State nonmember 
banks, State savings associations, Trusts and trustees.

12 CFR Part 351

    Banks, Banking, Capital, Compensation, Conflicts of interest, 
Credit, Derivatives, Government securities, Insurance, Insurance 
companies, Investments, Penalties, Reporting and recordkeeping 
requirements, Risk, Risk retention, Securities, Trusts and trustees.

17 CFR Part 75

    Banks, Banking, Compensation, Credit, Derivatives, Federal branches 
and agencies, Federal savings associations, Government securities, 
Hedge funds, Insurance, Investments, National banks, Penalties, 
Proprietary trading, Reporting and recordkeeping requirements, Risk, 
Risk retention, Securities, Swap dealers, Trusts and trustees, Volcker 
rule.

17 CFR Part 255

    Banks, Brokers, Dealers, Investment advisers, Recordkeeping, 
Reporting, Securities.

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons stated in the Common Preamble, the Office of the 
Comptroller of the Currency proposes to amend chapter I of Title 12, 
Code of Federal Regulations as follows:

[[Page 2788]]

PART 44--PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS

0
1. The authority citation for part 44 continues to read as follows:

    Authority:  7 U.S.C. 27 et seq., 12 U.S.C. 1, 24, 92a, 93a, 161, 
1461, 1462a, 1463, 1464, 1467a, 1813(q), 1818, 1851, 3101 3102, 
3108, 5412.

Subpart A--Authority and Definitions

0
2. In subpart A, Sec.  44.1 is amended by revising paragraph (c) to 
read as follows:

Sec.  44.1  Authority, purpose, scope, and relationship to other 
authorities.

* * * * *
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to banking entities for which the OCC is 
authorized to issue regulations under section 13(b)(2) of the Bank 
Holding Company Act (12 U.S.C. 1851(b)(2)) and take actions under 
section 13(e) of that Act (12 U.S.C. 1851(e)). These include national 
banks, Federal branches and Federal agencies of foreign banks, Federal 
savings associations, Federal savings banks, and any of their 
respective subsidiaries (except a subsidiary for which there is a 
different primary financial regulatory agency, as that term is defined 
in this part), but do not include such entities to the extent they are 
not within the definition of banking entity in Sec.  44.2(c) of this 
subpart.
* * * * *
0
3. In subpart A, Sec.  44.2 is amended by revising paragraph (r) to 
read as follows:

Sec.  44.2  Definitions

* * * * *
    (r) Insured depository institution, unless otherwise indicated, has 
the same meaning as in section 3(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(c)), but does not include:
    (1) An insured depository institution that is described in section 
2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)); or
    (2) An insured depository institution if it has, and if every 
company that controls it has, total consolidated assets of $10 billion 
or less and total trading assets and trading liabilities, on a 
consolidated basis, that are 5 percent or less of total consolidated 
assets.
* * * * *

Subpart C--Covered Funds Activities and Investments

0
4. In subpart C, Sec.  44.10 is amended by revising paragraph 
(d)(9)(iii) to read as follows:

Sec.  44.10  Prohibition on acquiring or retaining an ownership 
interest in and having certain relationships with a covered fund

* * * * *
    (d) * * *
    (9) * * *
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the 
same name, except as permitted under Sec.  44.11(a)(6).
* * * * *
0
5. In subpart C, Sec.  44.11 is amended by revising paragraph (a)(6) to 
read as follows:

Sec.  44.11  Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund

    (a) * * *
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof) except that a covered 
fund may share the same name or a variation of the same name with a 
banking entity that is an investment adviser to the covered fund if:
    (A) The investment adviser is not an insured depository 
institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (B) The investment adviser does not share the same name or a 
variation of the same name as an insured depository institution, a 
company that controls an insured depository institution, or a company 
that is treated as a bank holding company for purposes of section 8 of 
the International Banking Act of 1978 (12 U.S.C. 3106); and
    (ii) Does not use the word ``bank'' in its name.
* * * * *

BOARD OF GOVERNORS OF THE FEDERAL RESERVE

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the Common Preamble the Board proposes 
to amend chapter II of title 12 of the Code of Federal Regulations as 
follows:

PART 248--PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS (Regulation VV)

0
6. The authority citation for part 248 continues to read as follows:

    Authority: 12 U.S.C. 1851, 12 U.S.C. 221 et seq., 12 U.S.C. 
1818, 12 U.S.C. 1841 et seq., and 12 U.S.C. 3103 et seq.

Subpart A--Authority and Definitions

0
7. In subpart A, Sec.  248.1 is amended by revising paragraph (c) to 
read as follows:

Sec.  248.1  Authority, purpose, scope, and relationship to other 
authorities

* * * * *
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to banking entities for which the Board is 
authorized to issue regulations under section 13(b)(2) of the Bank 
Holding Company Act (12 U.S.C. 1851(b)(2)) and take actions under 
section 13(e) of that Act (12 U.S.C. 1851(e)). These include any state 
bank that is a member of the Federal Reserve System, any company that 
controls an insured depository institution (including a bank holding 
company and savings and loan holding company), any company that is 
treated as a bank holding company for purposes of section 8 of the 
International Banking Act (12 U.S.C. 3106), and any subsidiary of the 
foregoing other than a subsidiary for which the OCC, FDIC, CFTC, or SEC 
is the primary financial regulatory agency (as defined in section 2(12) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 (12 U.S.C. 5301(12)), but do not include such entities to the 
extent they are not within the definition of banking entity in Sec.  
248.2(c) of this subpart.
* * * * *
0
8. In subpart A, Sec.  248.2 is amended by revising paragraph (r) to 
read as follows:

Sec.  248.2   Definitions

* * * * *
    (r) Insured depository institution, unless otherwise indicated, has 
the same meaning as in section 3(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(c)), but does not include:
    (1) An insured depository institution that is described in section 
2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)); or
    (2) an insured depository institution if it has, and if every 
company that controls it has, total consolidated assets of $10 billion 
or less and total trading assets and trading liabilities, on a 
consolidated basis, that are 5 percent or less of total consolidated 
assets.
* * * * *

[[Page 2789]]

Subpart C--Covered Funds Activities and Investments

0
9. In subpart C, Sec.  248.10 is amended by revising paragraph 
(d)(9)(iii) to read as follows:

Sec.  248.10  Prohibition on acquiring or retaining an ownership 
interest in and having certain relationships with a covered fund

* * * * *
    (d) * * *
    (9) * * *
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the 
same name, except as permitted under Sec.  248.11(a)(6).
* * * * *
0
10. In subpart C, Sec.  248.11 is amended by revising paragraph (a)(6) 
to read as follows:

Sec.  248.11  Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund

    (a) * * *
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof) except that a covered 
fund may share the same name or a variation of the same name with a 
banking entity that is an investment adviser to the covered fund if:
    (A) The investment adviser is not an insured depository 
institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (B) The investment adviser does not share the same name or a 
variation of the same name as an insured depository institution, a 
company that controls an insured depository institution, or a company 
that is treated as a bank holding company for purposes of section 8 of 
the International Banking Act of 1978 (12 U.S.C. 3106); and
    (ii) Does not use the word ``bank'' in its name.
* * * * *

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the Common Preamble, the Federal 
Deposit Insurance Corporation proposes to amend chapter III of Title 
12, Code of Federal Regulations as follows:

PART 351--PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS

0
11. The authority citation for part 351 continues to read as follows:

    Authority: 12 U.S.C. 1851; 1811 et seq.; 3101 et seq.; and 5412.

Subpart A--Authority and Definitions

0
12. In Subpart A, Sec.  351.1 is amended by revising paragraph (c) to 
read as follows:

Sec.  351.1  Authority, purpose, scope and relationship to other 
authorities.

* * * * *
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to insured depository institutions for which 
the FDIC is the appropriate Federal banking agency, as defined in 
section 3(q) of the Federal Deposit Insurance Act, and certain 
subsidiaries of the foregoing, but does not include such entities to 
the extent they are not within the definition of banking entity in 
Sec.  351.2(c) of this subpart.
* * * * *
0
13. In subpart A, Sec.  351.2 is amended by revising paragraph (r) to 
read as follows:

Sec.  351.2  Definitions

* * * * *
    (r) Insured depository institution, unless otherwise indicated, has 
the same meaning as in section 3(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(c)), but does not include:
    (1) an insured depository institution that is described in section 
2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(D)); or
    (2) an insured depository institution if it has, and if every 
company that controls it has, total consolidated assets of $10 billion 
or less and total trading assets and trading liabilities, on a 
consolidated basis, that are 5 percent or less of total consolidated 
assets.
* * * * *

Subpart C--Covered Funds Activities and Investments

0
14. In subpart C, Sec.  351.10 is amended by revising paragraph 
(d)(9)(iii) to read as follows:

Sec.  351.10  Prohibitions on acquiring or retaining an ownership 
interest in and having certain relationships with a covered fund.

* * * * *
    (d) * * *
    (9) * * *
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the 
same name, except as permitted under Sec.  351.11(a)(6).
* * * * *
0
15. In subpart C, section 351.11 is amended by revising paragraph 
(a)(6) to read as follows:

Sec.  351.11   Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund.

    (a) * * *
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof), except that a 
covered fund may share the same name or a variation of the same name 
with a banking entity that is an investment adviser to the covered fund 
if:
    (A) The investment adviser is not an insured depository 
institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (B) The investment adviser does not share the same name or a 
variation of the same name as an insured depository institution, a 
company that controls an insured depository institution, or a company 
that is treated as a bank holding company for purposes of section 8 of 
the International Banking Act of 1978 (12 U.S.C. 3106); and
    (ii) Does not use the word ``bank'' in its name.
* * * * *

COMMODITY FUTURES TRADING COMMISSION

17 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the Common Preamble, the Commodity 
Futures Trading Commission amends Part 75 to chapter I of Title 17 of 
the Code of Federal Regulations as follows:

PART 75--PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS

0
21. The authority citation for Part 75 continues to read as follows:

    Authority: 12 U.S.C. 1851.

0
22. In Subpart A, Sec.  75.1 is amended by revising paragraph (c) to 
read as follows:

[[Page 2790]]

Sec.  75.1  Authority, purpose, scope and relationship to other 
authorities.

* * * * *
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to banking entities for which the CFTC is the 
primary financial regulatory agency, as defined in section 2(12) of the 
Dodd-Frank Act, but does not include such entities to the extent they 
are not within the definition of banking entity in Sec.  75.2(c) of 
this subpart.
* * * * *
0
23. In subpart A, Sec.  75.2 is amended by revising paragraph (r) to 
read as follows:

Sec.  75.2   Definitions

* * * * *
    (r) Insured depository institution, unless otherwise indicated, has 
the same meaning as in section 3(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(c)), but does not include:
    (1) an insured depository institution that is described in section 
2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1841(c)(2)(D)); or
    (2) an insured depository institution if it has, and if every 
company that controls it has, total consolidated assets of $10 billion 
or less and total trading assets and trading liabilities, on a 
consolidated basis, that are 5 percent or less of total consolidated 
assets.
* * * * *

Subpart C--Covered Funds Activities and Investments

0
24. In subpart C, Sec.  75.10 is amended by revising paragraph 
(d)(9)(iii) to read as follows:

Sec.  75.10  Prohibitions on acquiring or retaining an ownership 
interest in and having certain relationships with a covered fund.

* * * * *
    (d) * * *
    (9) * * *
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the 
same name, except as permitted under Sec.  75.11(a)(6).
* * * * *
0
25. In subpart C, Sec.  75.11 is amended by revising paragraph (a) to 
read as follows:

Sec.  75.11   Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund.

    (a) * * *
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof), except that a 
covered fund may share the same name or a variation of the same name 
with a banking entity that is an investment adviser to the covered fund 
if:
    (A) The investment adviser is not an insured depository 
institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (B) The investment adviser does not share the same name or a 
variation of the same name as an insured depository institution, a 
company that controls an insured depository institution, or a company 
that is treated as a bank holding company for purposes of section 8 of 
the International Banking Act of 1978 (12 U.S.C. 3106); and
    (ii) Does not use the word ``bank'' in its name.
* * * * *

SECURITIES AND EXCHANGE COMMISSION

17 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the Common Preamble, the Securities 
and Exchange Commission proposes to amend Part 255 to chapter II of 
Title 17 of the Code of Federal Regulations as follows:

PART 255--PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND 
RELATIONSHIPS WITH COVERED FUNDS

0
16. The authority for part 255 continues to read as follows:

    Authority: 12 U.S.C. 1851

Subpart A--Authority and Definitions

0
17. In Subpart A, Sec.  255.1 is amended by revising paragraph (c) to 
read as follows:

Sec.  255.1  Authority, purpose, scope and relationship to other 
authorities.

* * * * *
    (c) Scope. This part implements section 13 of the Bank Holding 
Company Act with respect to banking entities for which the SEC is the 
primary financial regulatory agency, as defined in this part, but does 
not include such entities to the extent they are not within the 
definition of banking entity in Sec.  255.2(c) of this subpart.
* * * * *
0
18. In subpart A, Sec.  255.2 is amended by revising paragraph (r) to 
read as follows:

Sec.  255.2  Definitions

* * * * *
    (r) Insured depository institution, unless otherwise indicated, has 
the same meaning as in section 3(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(c)), but does not include:
    (1) an insured depository institution that is described in section 
2(c)(2)(D) of the BHC Act (12 U.S.C. 1841(c)(2)(D)); or
    (2) an insured depository institution if it has, and if every 
company that controls it has, total consolidated assets of $10 billion 
or less and total trading assets and trading liabilities, on a 
consolidated basis, that are 5 percent or less of total consolidated 
assets.
* * * * *

Subpart C--Covered Funds Activities and Investments

0
19. In subpart C, section 255.10 is amended by revising paragraph 
(d)(9)(iii) to read as follows:

Sec.  255.10  Prohibition on acquiring or retaining an ownership 
interest in and having certain relationships with a covered fund

* * * * *
    (d) * * *
    (9) * * *
    (iii) To share with a covered fund, for corporate, marketing, 
promotional, or other purposes, the same name or a variation of the 
same name, except as permitted under Sec.  255.11(a)(6).
* * * * *
0
20. In subpart C, Sec.  255.11 is amended by revising paragraph (a)(6) 
to read as follows:

Sec.  255.11  Permitted organizing and offering, underwriting, and 
market making with respect to a covered fund

    (a) * * *
    (6) The covered fund, for corporate, marketing, promotional, or 
other purposes:
    (i) Does not share the same name or a variation of the same name 
with the banking entity (or an affiliate thereof) except that a covered 
fund may share the same name or a variation of the same name with a 
banking entity that is an investment adviser to the covered fund if:
    (A) The investment adviser is not an insured depository 
institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (B) The investment adviser does not share the same name or a 
variation of the same name as an insured depository

[[Page 2791]]

institution, a company that controls an insured depository institution, 
or a company that is treated as a bank holding company for purposes of 
section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); 
and
    (ii) Does not use the word ``bank'' in its name.
* * * * *

    Dated: December 18, 2018
William A. Rowe,
Chief Risk Officer.
    By order of the Board of Governors of the Federal Reserve 
System, December 20, 2018.
Ann E. Misback,
Secretary of the Board.
    Dated at Washington, DC, on December 18, 2018.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.

    By the Securities and Exchange Commission.

    Date: December 20, 2018.
Brent J. Fields,
Secretary.

    Issued in Washington, DC, on December 20, 2018, by the 
Commodities Futures Trading Commission.
Christopher Kirkpatrick,
Secretary of the Commodities Futures Trading Commission.
[FR Doc. 2019-00797 Filed 2-7-19; 8:45 am]
 BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 8011-01-P; 6351-01-P