On November 16, 2010, after consulting with the federal banking agencies, the Federal Reserve Board requested comment on a proposed rule to implement the Volcker Rule, which is designed to restrict banks from making certain investments and activities. The Volcker Rule generally prohibits banking entities from engaging in proprietary trading in securities, derivatives, or certain other financial instruments, and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The proposed rule would allow the Board to impose conditions on any extension granted under the proposed rule if the Board determines such conditions are necessary or appropriate to protect the safety and soundness of banking entities or the financial stability of the United States, address material conflicts of interest or other unsound practices, or otherwise further the purposes of section 13 of the BHC Act and the proposed rules. The Volcker Rule also allows a banking entity to request in writing the FRB’s approval for an additional extension of up to 5 years in order to permit the banking entity to meet contractual commitments in place as of May 21, 2010 to a hedge fund or private equity fund that qualifies as an “illiquid fund.” The proposed rule defines certain terms, including “illiquid asset,” “principally invested” in illiquid assets, “contractually committed to principally invest” in illiquid assets, and “investment strategy to principally invest” in illiquid assets.