The Clearing House Association sent a comment letter to the Federal Reserve Board commenting on a proposed rule regarding the conformance period for entities engaged in proprietary trading or private-equity-fund and hedge-fund activities. The Association believes that the proposal severely limits the availability of the special extension for banking entities’ investments in illiquid funds, which is contrary to Congressional intent and will raise legal and prudential concerns for banking entities. TCH recommends certain changes to the definitions in the proposed rule to allow the special extension for banking entities’ investments in illiquid funds to achieve its statutory purpose, taking into account how funds operate in practice. On February 9 the FRB approved a final rule to implement Dodd-Frank provision providing firms with a defined period to conform activities and investments to the requirements of the Volcker Rule. The final rule is largely similar to, but differs in certain respects from, the November 2010 proposed rule. Changes include expanded conditions under which an asset may be considered an “illiquid asset” and broadened the types of documents that may be considered in determining whether a hedge fund or private equity fund is “contractually committed” to principally invest in illiquid assets or whether a banking entity that has sponsored a hedge fund or private equity fund is “contractually obligated” to invest or remain invested in the fund. The rule is effective April 1.