JPMorgan Chase is pushing ahead with talks to buy a large Brazilian hedge fund and private equity group, in spite of impending US legislation designed to limit the involvement of commercial banks in such activities.

People close to the situation said the US financial group was in advanced discussions to buy Gávea Investimentos, an asset management company that manages about $5.3bn in assets and was founded by Armínio Fraga, the former president of Brazil's central bank. No deal has yet been reached and the talks could still collapse, but JPMorgan's decision to go ahead with the discussions highlights its confidence that the new regulatory regime will not prevent deposit-taking banks from owning hedge funds.

The so-called “Volcker rule” would ban banks from trading on their own account and limit their ability to invest in or “sponsor” hedge funds and private equity.

The language of the proposed measure, which is due to be discussed this week as Congress finalises its reform package, is vague and some politicians have interpreted it as prohibiting banks from owning hedge funds and private equity groups.

JPMorgan and other Wall Street banks believe they will be allowed to keep those higher-risk activities, provided they do not invest their own money in the funds.

JPMorgan and Gávea declined to comment, but people familiar with the situation said JPMorgan was waiting for details of the reforms before it finalises any deal. If everything goes to plan, the purchase could be announced as early as next month, they added.

JPMorgan also controls Highbridge, the alternative investment manager with about $21bn in assets under management, and One Equity Partners, a private equity group.

As the businesses would both use a different name from JPMorgan, and have separate management, they are not deemed to be “sponsored” by the bank under the current language in the reform bill.