United States: A User’s Guide To The Volcker Rule

SUMMARY

The legislation known as the Volcker Rule was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act and codified in Section 13 of the Bank Holding Company Act ("BHC Act").1 The Volcker Rule generally prohibits, subject to exceptions, a banking entity from engaging in proprietary trading and from acquiring or retaining an ownership interest in or sponsoring a hedge fund or private equity fund. Certain trading and fund activity is expressly permitted – notably, underwriting activities, market making-related activities, and risk-mitigating hedging activities.

The Volcker Rule legislation covered the area with a broad brush, leaving many significant issues open to regulatory interpretation. In December 2013, five federal financial regulatory agencies (collectively, the "Agencies"),2 adopted a final rule (the "Final Rule") construing the Volcker Rule.3 The Final Rule also sets out a compliance and reporting regime for banking entities engaged in proprietary trading or fund sponsorship or investment. The determinations made by the Agencies in the Final Rule reflect two years of comment and debate following the issuance of a Proposed Rule (the "Proposed Rule") in November 2011.

Under the Final Rule, larger banks and bank affiliates (based on total assets) that are engaged in proprietary trading permitted by the Final Rule will be subject to a compliance regime to ensure compliance with the Final Rule. In addition, larger banks and bank affiliates (in terms of the amount of their trading assets and liabilities) that are engaged in proprietary trading permitted by the Final Rule will be required to report a highly technical set of quantitative measures. Banking entities with only a "modest" level of trading and fund investment activities will be subject to a much less comprehensive set of compliance requirements. The compliance requirements are discussed in more detail below.

The Final Rule is complex in scope and has already elicited significant commentary and questions from the banking industry and the public at large. The purpose of this guide is to discuss the requirements of the Final Rule at a practical level. While the relevant components of the Final Rule are addressed here, financial institutions should consider all of the Final Rule's "fine print" – the many detailed definitions and conditions that comprise the Final Rule (as well as the extensive commentary contained in Attachment B to the Final Rule) – before making any decisions regarding compliance.

The Volcker Rule, as construed by the Final Rule, has special application to foreign banking organizations that have U.S. bank subsidiaries or operate branches, agencies or commercial lending company subsidiaries in the United States ("FBOs"). Please refer to our Client Alert dated December 11, 2013 for a more complete explanation of the impact of the Final Rule on FBOs. The Client Alert may be found at http://www.mofo.com/files/Uploads/Images/131211-Volcker-Rule.pdf.

The Conformance Period

The Final Rule is effective April 1, 2014, but the compliance period during which banking entities must conform their activities to the Volcker Rule has been extended for one year until July 21, 2015. Nonetheless, effective June 30, 2014, the largest banking entities (those with $50 billion or more in consolidated trading assets and liabilities, as discussed further below) are required to report quantitative measurements to regulators.

The FRB emphasized in its order approving the extension of the conformance period that each banking entity is expected to engage in good-faith efforts, appropriate for its activities and investments, that will result in conformance with the Volcker Rule not later than the end of the conformance period. Moreover, banking entities should not expand activities or make investments during the conformance period with an expectation that additional time to conform those activities or investments will be granted, and banking entities with stand-alone proprietary trading operations are expected to promptly terminate or divest such operations.

Banking Entities

The Volcker Rule applies to "banking entities." A "banking entity" includes:

  1. any insured depository institution;
  2. any company that controls an insured depository institution (in other words, any bank holding company or savings and loan holding company);
  3. any FBO; and
  4. any affiliate of the foregoing. The term "affiliate" is used as defined in the BHC Act and thus includes any company controlled by a banking entity.

Notwithstanding the breadth of the definition of a "banking entity," there are certain specific exceptions. For example, a "banking entity" does not include a covered fund that is not itself a bank holding company or an FBO. This is an important exception. A bank holding company that serves as the general partner of a fund would be deemed to control that fund. But for this exception, the "covered fund" would itself be a "banking entity" subject to the Volcker Rule.

In addition, a "banking entity" does not include a portfolio company held by a bank holding company or an FBO under the so-called BHC Act's merchant banking authority,4 a company controlled by an insurance company affiliate of a bank holding company,5 or any portfolio concern that is controlled by a small business investment company, as defined in Section 103(3) of the Small Business Investment Act of 1958, as long as the portfolio company or portfolio concern is not itself an insured depository institution, a bank holding company or savings and loan holding company, or an FBO.

SUBPART B6 – PROPRIETARY TRADING

The Volcker Rule prohibits a banking entity from engaging in proprietary trading, subject to certain exceptions discussed below. Proprietary trading is defined as engaging as principal for the trading account of the banking entity in the purchase or sale of a financial instrument. Thus, compliance with the Rule by a banking entity depends on whether the account for which the trade is placed satisfies the definition of "trading account" and whether the trade involves a "financial instrument."

Definitions

Trading Account. The Final Rule provides a functional definition of "trading account," which means an account that satisfies any one of three criteria: a "purpose test," a "market risk capital rule test," or a "status test."

The Purpose Test.A trading account includes any account used by a banking entity to buy or sell a financial instrument principally for the purpose of short-term resale, benefitting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging a position resulting from any of the foregoing trading activities.

Market Risk Capital Rule Test. If the banking entity or any affiliate is an insured depository institution, bank holding company, or savings and loan holding company and calculates risk-based capital ratios under the market risk capital rule, a trading account includes accounts used to buy or sell one or more financial instruments that are both market risk capital rule covered positions and trading positions (or hedges of other market risk capital rule covered positions).

Status Test. If the banking entity is licensed or registered to engage in the business of a securities dealer, swap dealer or security-based swap dealer, a trading account includes any account used by a banking entity to purchase or sell financial instruments for any purpose to the extent the financial instruments are purchased or sold in connection with activities that require the banking entity to be so licensed or registered.

Trades are presumed to be for the trading account of a banking entity if the banking entity holds the position for fewer than sixty days, unless the banking entity can demonstrate that it did not make the trade for any of the purposes described in the preceding paragraph.

As the definition of a trading account is broad, the Rule excludes the following types of trading from the definition of proprietary trading:

  • Trades pursuant to purchase or reverse repurchase agreements;
  • Trades that arise under a transaction in which the banking entity lends or borrows securities temporarily under an agreement pursuant to which the lender retains the economic interest in the securities, and has the right to recall the loaned securities;
  • Trades for the purpose of liquidity management in accordance with a documented liquidity management plan that meets specific requirements of the Final Rule;7
  • Trades by a derivatives clearing organization or clearing agency;
  • Any "excluded clearing activities"8 by a banking entity that is a member of a clearing agency, a member of a derivatives clearing organization or a member of a designated financial market utility;
  • Trades to satisfy an existing delivery obligation, including to prevent or close out a failure to deliver, in connection with delivery, clearing or settlement activity;
  • Trades to satisfy an obligation in connection with a judicial, administrative or SRO or arbitration proceeding;
  • Trades where the banking entity is acting solely as agent, broker or custodian;
  • Trades through a deferred compensation, stock-bonus, profit-sharing or pension plan of the banking entity; and
  • Trades made in the ordinary course of collecting a debt previously contracted ("DPC") in good faith, provided that the banking entity divests the financial instrument as soon as practicable.

Trades between affiliates are not specifically excluded from the definition of proprietary trading and therefore must rely on a stated exception.

Financial Instrument. A "financial instrument" includes:

  • a security (including an option on a security);
  • a derivative (including an option on a derivative); and
  • a contract of sale of a commodity for future delivery (or an option on the same).

Specifically excluded from the definition of "financial instrument" are:

  • loans;
  • a commodity that is not (i) an "excluded commodity"9 (other than foreign exchange or currency), (ii) a derivative, or (iii) a commodity future; and
  • foreign exchange or currency.

Permitted underwriting and market making-related activities

The prohibition against proprietary trading does not apply to underwriting activities and market making-related activities. Significant comment was provided to the Agencies after the publication of Proposed Rule regarding how best to distinguish these permitted activities from prohibited proprietary trading. The Final Rule enumerates detailed conditions for qualifying as permitted underwriting or market-making. The long commentary published with the Final Rule in Attachment B provides useful insights into the view of the Agencies regarding the distinctive features of these permitted activities. This guide is intended as a summary only.

To engage in either permitted activity, a banking entity must comply with three overall conditions:

  • the banking entity must maintain an internal compliance program required by Subpart D (and discussed below) to ensure that the banking entity complies with the conditions permitting the activity;
  • the compensation arrangements of people involved in these activities must not be designed to reward or incentivize prohibited proprietary trading; and
  • the banking entity must be licensed or registered to engage in the permitted activity.

In addition, the following specific conditions apply.

Underwriting. Underwriting activities are permitted only if the trading desk's10 underwriting position is related to a "distribution" of securities for which the banking entity is acting as underwriter.11 The amount and type of the securities in the underwriting position cannot exceed the reasonably expected near term demands of clients, customers or counterparties, and the trading desk must make reasonable efforts to reduce the underwriting position within a reasonable period.

The Final Rule defines "distribution" to include offerings of securities made pursuant to a registration statement under the Securities Act of 1933 (the "1933 Act"), as well as offerings whether or not pursuant to the 1933 Act that involve special selling efforts and selling methods.12

The Final Rule defines "underwriter" broadly as well, to include a person who has agreed to purchase securities from an issuer or selling security holder for distribution, or engage in or manage a distribution of securities for or on behalf of the issuer or selling security holder, as well as a person who has agreed to participate or is participating in a distribution of securities on behalf of the issuer or selling security holder.

Market-making. Market making-related activities are permitted only if the relevant trading desk13 routinely stands ready to purchase and sell one or more types of financial instruments related to its financial exposure and is willing and available to quote, purchase or sell those types of financial instruments for its own account in commercially reasonable amounts and throughout market cycles on a basis appropriate for the liquidity, maturity and depth of the market for the relevant types of financial instruments.14 In addition, the amount, types and risks of the financial instruments in the trading desk's market-maker inventory must be designed not to exceed the reasonably expected near-term demands of clients, customers, or counterparties, based on:

  • the liquidity, maturity, and depth of the market for the relevant types of financial instruments; and
  • demonstrable analysis of historical customer demand, current inventory of financial instruments, and market and other factors regarding the amount, types, and risks, of or associated with financial instruments in which the trading desk makes a market, including through block trades.

The Final Rule establishes a rebuttable presumption that the trading desk of another banking entity with trading assets and liabilities exceeding $50 billion is not a "client, customer, or counterparty" for the purposes of considering whether trading with that desk is permitted market making. In Attachment B, the Agencies recognize, however, that allowing a trading desk to engage in customer-related interdealer trading is appropriate because it can help a trading desk appropriately manage its inventory and risk levels and can effectively allow clients, customers, or counterparties to access a larger pool of liquidity. However, regulators will scrutinize interdealer trading to ensure it reflects market-making activities and not impermissible proprietary trading.

Permitted risk-mitigating hedging activities: The prohibition on proprietary trading does not apply to certain risk-mitigating hedging activities. Section __.5(a) of the Final Rule permits, subject to numerous conditions, hedging activities that are "in connection with and related to individual or aggregated positions, contracts or other holdings" and "designed to reduce the specific risks to the banking entity" that are "related to such positions, contracts or other holdings."

The Compliance Program detailed below is a condition for any risk-mitigating hedging activity to be permissible. Such Compliance Program is required to include, among other things:

  • written policies and procedures regarding positions, techniques and strategies that may be used for hedging;
  • documentation indicating what positions, contracts or other holdings a particular trading desk may use in its hedging activities;
  • position and aging limits; and
  • internal controls and authorization procedures (including relevant escalation procedures) and analysis, including correlation analysis, and independent testing designed to ensure that the positions, techniques and strategies that may be used for hedging may reasonably be expected to demonstrably reduce or otherwise significantly mitigate the specific, identifiable risks being hedged, and the

correlation analysis demonstrates that the hedging activity demonstrably reduces or otherwise significantly mitigates the specific, identifiable risks being hedged.

Risk-mitigating hedging activities must not give rise, at the inception of a hedge, to any significant new or additional risk that is not itself hedged contemporaneously, and continuing review, monitoring and management of hedging activity, and ongoing recalibration of the hedging activity, is required. The Final Rule imposes additional documentation requirements with respect to risk-mitigating hedging activities established by a trading desk other than the desk responsible for the underlying positions and with respect to hedges of aggregated positions across trading desks.

Other permitted proprietary trading activities

The prohibition on proprietary trading does not apply to the following:

  • trading in U.S. government or government agency securities;
  • trading in municipal bonds;
  • trading by a foreign bank subsidiary of a U.S. banking entity of debt of a foreign government (or of any agency or political subdivision of that foreign government) issued by the foreign country in which the foreign bank affiliate is organized;
  • trading on behalf of a customer in a fiduciary capacity or as riskless principal; and
  • trading by a banking entity that is a regulated insurance company (including a foreign insurance company), whether for the insurance company's general account or for a separate account.

Exemptions for FBOs

The Final Rule establishes an exemption for proprietary trading by an FBO to the extent the trading is conducted solely outside the United States. In addition, U.S. affiliates of FBOs are permitted to engage in proprietary trading of debt of the foreign country (or its agencies or political subdivisions) under which the FBO is organized. These two exemptions are discussed at greater length in our Client Alert available at http://www.mofo.com/files/Uploads/Images/131211-Volcker-Rule.pdf.

Prudential Backstops

The permitted proprietary trading activities referenced above are not permissible under the Rule if (i) they would involve or result in a material conflict of interest between the banking entity and its clients, customers or counterparties; (ii) they would result in a material exposure by the banking entity to a high-risk asset15 or a high-risk trading strategy;16 or (iii) they pose a threat to the safety and soundness of the banking entity or to the financial stability of the United States.

A material conflict of interest is deemed to exist if the banking entity engages in transactions that would involve or result in the banking entity's interests being materially adverse to the interests of its client, customer or counterparty with respect to such transactions, and prior to engaging in such transactions, the banking entity has not made appropriate disclosures to address the conflict of interest or, in appropriate circumstances, established information barriers memorialized in written policies and procedures, such as physical separation of personnel or functions or other measures designed to prevent such conflict of interest.

Failure to comply with these prudential backstops can take away the availability of what otherwise appears to be a clearly available trading exemption. This is worrisome in that there are no clear guidelines regarding the measures a banking entity is required to take with respect to any given activity to assure compliance. In particular, it will be difficult for banking entities to know what would constitute adequate disclosure to deal with a potential conflict of interest, and what kind of information barriers would be appropriate in particular circumstances. In addition, the incurrence of a substantial financial loss in a permitted trading activity, regardless of the compliance framework in which the activity is conducted, bears the risk, in hindsight, that the activity will be characterized as "high risk," with the consequence of losing the exemption relied on for the activity.

To read this article in full, please click here.

Footnotes

1 Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat.1376 (July 21, 2010) ("Dodd-Frank" or the "Act"); Section 13 of the Bank Holding Company Act ("BHC Act"), 12 U.S.C. § 1851.

2 The Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board ("FRB"), the Office of the Comptroller of the Currency ("OCC"), the Securities and Exchange Commission ("SEC"), and the Commodity Futures Trading Commission ("CFTC").

3 The Final Rule may be found at http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20131210a1.pdf. The Final Rule was accompanied by a long explanatory commentary ("Attachment B"). Attachment B may be found at http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20131210a2.pdf.

4 12 U.S.C.§ 1843(k)(4)(H).

5 12 U.S.C. § 1843(k)(4)(I).

6 The Volcker Rule is 71 pages long and consists of Subparts A through D and Appendices A and B. Subpart A is titled "Authority and Definitions," and is not discussed directly here.

7 The liquidity management plan should:

(i) specifically contemplate and authorize the particular securities to be used for liquidity management purposes, the amount, types, and risks of these securities that are consistent with liquidity management, and the circumstances in which the securities may be used;

(ii) require that any transaction in securities under the plan be principally for the purpose of liquidity management and not for short-term price movements, resale, profits or arbitrage;

(iii) require that any securities purchased or sold for liquidity management purposes be highly liquid and limited to securities the risks of which the banking entity does not reasonably expect to give rise to appreciable profits or losses in the short term;

(iv) limit any securities and other instruments purchased or sold for liquidity management purposes to an amount consistent with the banking entity's near-term funding needs;

(v) includes written policies and procedures, internal controls, analysis and independent testing to ensure that transactions in securities other than domestic or foreign government obligations are for the purpose of liquidity management; and

(vi) be consistent with the relevant Agency's supervisory requirements regarding liquidity management.

8 Final Rule, §___.3(e)(7).

9 An "excluded commodity" is as defined in Section 1a(19) of the Commodity Exchange Act, 7 U.S.C. 1a(19). "The term "excluded commodity" means—

(i) an interest rate, exchange rate, currency, security, security index, credit risk or measure, debt or equity instrument, index or measure of inflation, or other macroeconomic index or measure;

(ii) any other rate, differential, index, or measure of economic or commercial risk, return, or value that is—

(I) not based in substantial part on the value of a narrow group of commodities not described in clause (i); or

(II) based solely on one or more commodities that have no cash market;

(iii) any economic or commercial index based on prices, rates, values, or levels that are not within the control of any party to the relevant contract, agreement, or transaction; or

(iv) an occurrence, extent of an occurrence, or contingency (other than a change in the price, rate, value, or level of a commodity not described in clause (i)) that is—

(I) beyond the control of the parties to the relevant contract, agreement, or transaction; and

(II) associated with a financial, commercial, or economic consequence."

10 A "trading desk" is the smallest discrete unit of organization of a banking entity that purchases or sells financial instruments for the trading account of the banking entity. Final Rule, §___.3(e)(13).

11 Final Rule, § __.4(a).

12The definition of "distribution" tracks in some respects the definition provided in Regulation M under the Securities Exchange Act of 1934, 17 CFR § 242.100 to105 but excludes the need to consider the "magnitude" of the offering. Thus, permitted underwriting activities include activities related to 1933 Act registered offerings as well as private placements, Rule 144A offerings, commercial paper offerings, and syndicate and stabilizing activities. Attachment B provides a useful discussion of the types of offerings, as well as the types of syndicate and related stabilizing activities, which are intended to be included.

13 See note 10 supra.

14 Final Rule, § __.4(b).

15 An asset that would, if held by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States. Final Rule, § ___.7(c)(1). See also note 31 infra.

16 A trading strategy that would, if engaged in by a banking entity, significantly increase the likelihood that the banking entity would incur a substantial financial loss or would pose a threat to the financial stability of the United States. Final Rule, § ___.7(c)(2). See also note 31 infra.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Marc-Alain Galeazzi
Julian E. Hammar
Daniel Nathan
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions