Trading in connection with underwriting activities is permitted only if the trading desk's underwriting position is related to a distribution of securities for which the banking entity is acting as underwriter. The prohibition on proprietary trading does not apply to purchases or sales of financial instruments by a banking entity made in connection with that entity's market making-related activities. 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' are permitted. In order to distinguish between these permitted activities and impermissible proprietary trading, the rule requires banking entities to establish comprehensive compliance policies, procedures, and rigorous calculations and documentation. Certain activities that occur solely outside of the US are excluded from the scope of the rule. Although it is still too early to assess the full impact of the rule on capital markets activities in the US, it is fair to assume that certain foreign banking entities with limited operations in the country may determine to restructure their US business and pare back the scope of their activities. For US banking entities, it is reasonable to anticipate that more business may be conducted on an agency or riskless principal basis, and that market making in certain more illiquid securities may be negatively affected. Given that non-bank broker-dealers are not subject to the rule, certain activities may shift to these entities. Over time, the effects are likely to be more far-reaching than these observations suggest.