S.3098 - PROP Trading Act

A bill to prohibit proprietary trading and certain relationships with hedge funds and private equity funds, to address conflicts of interest with respect to certain securitizations, and for other purposes. view all titles (4)

All Bill Titles

  • Official: A bill to prohibit proprietary trading and certain relationships with hedge funds and private equity funds, to address conflicts of interest with respect to certain securitizations, and for other purposes. as introduced.
  • Popular: PROP Trading Act as introduced.
  • Short: PROP Trading Act as introduced.
  • Short: Protect Our Recovery Through Oversight of Proprietary Trading Act of 2010 as introduced.

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  • Today: 1
  • Past Seven Days: 3
  • All-Time: 2,664
 
Introduced
 
Senate
Passes
 
House
Passes
 
President
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03/10/10
 
 
 
 
 
 
 

OpenCongress Summary

A stand-alone version of the "Volcker Rule" designed to limit high-risk financial speculation, this bill would ban federally insured commercial banks from engaging in proprietary trading for their own profit. It would also bars banks from sponsoring a hedge fund or private equity fund.
OpenCongress bill summaries are written by OpenCongress editors and are entirely independent of Congress and the federal government. For the summary provided by Congress itself, via the Congressional Research Service, see the "Official Summary" below.

Official Summary

Protect Our Recovery Through Oversight of Proprietary Trading Act of 2010 or the PROP Trading Act - Amends the Bank Holding Company Act of 1956 to prohibit a banking entity from: (1) engaging in proprietary trading; or (2) having an ownership interest in or sponsoring a hedge fund or a priv

Official Summary

Protect Our Recovery Through Oversight of Proprietary Trading Act of 2010 or the PROP Trading Act - Amends the Bank Holding Company Act of 1956 to prohibit a banking entity from:
(1) engaging in proprietary trading; or
(2) having an ownership interest in or sponsoring a hedge fund or a private equity fund. Subjects any specified nonbank financial company holding such proprietary trading and ownership interests to additional capital requirements and additional quantitative limits. Directs the Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) to adopt rules jointly to implement this Act. Authorizes the Board and the FDIC to exclude from such prohibitions specified transactions or activities, including:
(1) the purchase or sale of obligations of the United States or any federal agency;
(2) instruments issued by the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and
(3) obligations of any state or its political subdivision. Prohibits from the class of excluded activities any transactions that would:
(1) result in a material conflict of interest between the banking entity or the nonbank financial company and its clients, customers, or counterparties;
(2) result in exposure to high risk assets or high risk trading strategies;
(3) threaten the safety and soundness of a banking entity or the nonbank financial company; or
(4) threaten the financial stability of the United States. Prohibits any banking entity that serves, directly or indirectly, as the investment manager or investment adviser to a hedge fund or private equity fund from entering into a covered transaction with, or provide custody, securities lending, or other prime brokerage services to, such person. Treats a banking entity that serves as investment manager or investment adviser to a hedge fund or private equity fund as if:
(1) it were a member bank subject to the Federal Reserve Act; and
(2) the hedge fund or private equity fund were an affiliate thereof. Amends the Securities Act of 1933 to prohibit an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security, while the security is outstanding and held by unaffiliated investors, from engaging in any transaction that would:
(1) give rise to any material conflict of interest with respect to any investor; or
(2) undermine the value, risk, or performance of such security

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