Included in the Dodd-Frank Act of 2010 at the behest of former Federal Reserve Chair Paul Volcker, almost all U.S. deposit taking institutions, their affiliates, and foreign banks with a significant U.S. presence will be impacted by the Volcker rule in some way. The regulation aims to reduce the short-term and long-term trading risk of deposit-taking institutions through requirements that prohibit banks from engaging in proprietary trading (with some exceptions for market-making, hedging and underwriting) and compel them to divest their ownership interest in ‘covered funds’ such as hedge funds, private equity funds, most collateralized loan obligations (CLOs), and some other types of securitizations.
Our Enterprise-level solution helps banks identify covered funds quickly and efficiently with minimal manual effort, automatically extracting pertinent details from securitization and CLO deal documents to identify covered funds and provide details about ownership structure, deal type, tranche and collateral, and flagging the need for further legal review when a clear determination cannot be made. Bloomberg’s solution enables banks to focus resources on the most complex evaluations, track sponsorship of covered funds, and calculate Tier 1 capital limits associated with ownership interests. Its also allows buy-side institutions to identify market liquidity and price discrepancies, and drive demand for non-covered funds.