On December 10, 2013, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission promulgated the final rule implementing the prohibitions and limitations imposed on banking entities by Section 13 of the Bank Holding Company Act of 1956, known as the “Volcker Rule.” Click here for a general overview of the Volcker Rule.
Since the first published proposal in 2011, we have tracked initiatives and developments regarding a possible European financial tax that would apply to derivatives, among other types of financial transactions. Despite the publication of a European Commission (“EC”) directive in February 2013 that would apply to eleven participating member-states, the scope and implementation of a financial transaction tax continues to be fiercely debated. Among other things, the proposed directive would, after an initial “transitional” period, impose a tax rate of at least 0.01% of the notional amount on derivative transactions.
On November 21, 2013, PricewaterhouseCoopers LLC released a study—commissioned by 27 trade groups in the financial industry—that, based on existing literature surrounding a financial transaction tax, questioned the benefits of such a tax and highlighted its potential to negatively impact financial markets, as well as economic growth. With respect to the derivatives market, the study noted that the EC’s impact assessment estimated that a financial transaction tax would reduce trading volumes by between 70% and 90%. The study further noted that certain commentators have predicted that the tax could have a substantial (or, for some product types, profound) impact on the bid-offer spreads of derivative transactions.
Most recently, it has been reported that the participating member-states have been discussing the implementation of a more narrow and modest tax, including one with more robust exemptions. However, a revised proposal has not yet been published.
 See “Financial Transaction Tax Developments” posted on August 26, 2013; “Financial Transaction Tax Developments” posted on June 11, 2013; “Financial Transaction Tax” posted on February 15, 2012; and “Europe Proposes Financial Transaction Tax” posted on October 15, 2011.
 PricewaterhouseCoopers LLC, Financial transaction tax: the impacts and arguments, November 21, 2013 (available at: http://www.cbi.org.uk/media/2482473/FTT_impacts_and_arguments.pdf).
 Id. at 24.
On December 20, 2013, the Commodity Futures Trading Commission (“CFTC”) approved substituted compliance in the European Union and five other jurisdictions for a range of “entity-level” and “transaction-level” requirements of Dodd-Frank. Pursuant to a substituted compliance determination, certain swap counterparties generally may comply with the requirements of a jurisdiction (e.g., those of the European Market Infrastructure Regulation in Europe) in lieu of comparable Dodd-Frank requirements.
These substituted compliance determinations appear to have been issued in connection with the expiration on December 21, 2013 of substantial portions of the July 21, 2013 CFTC cross-border exemptive order (the “Exemptive Order”), which generally delayed application of the entity-level and transaction-level requirements of Dodd-Frank to certain non-U.S. swap counterparties. The recent substituted compliance determinations covered the following requirements:
Entity-Level Requirements: Chief Compliance Officer (regulation 3.3); Swap Data Recordkeeping (regulations 23.201, 23.203); Risk Management Program (regulation 23.600); Monitoring of Position Limits (regulation 23.601); Diligent Supervision (regulation 23.602); Business Continuity (regulation 23.603); Research Conflicts (regulation 23.605(c)); Clearing Conflicts (regulation 23.605(d)); Undue Influence (regulation 23.605(e)); Availability of Information for Disclosure (regulation 23.606); Clearing Member Risk Management (regulation 23.609).
Transaction-Level Requirements: Swap Confirmation (regulation 23.501); Portfolio Reconciliation (regulation 23.502); Portfolio Compression (regulation 23.503); certain provisions of Daily Trading Records (regulation 23.202); certain provisions of Swap Trading Relationship Documentation (regulation 23.504).
Also on December 20, 2013, the Division of Swap Dealer and Intermediary Oversight of the CFTC (the “Division”) issued two no-action letters related to the application of certain entity-level requirements. Pursuant to one of these letters, the Division stated that it will not recommend that the CFTC take enforcement action prior to March 3, 2014 against a non-U.S. swap dealer established in the European Union or four other jurisdictions for failure to comply with certain entity-level requirements of Dodd-Frank, specifically Risk Management Program (regulation 23.600(c)(2)) or Restrictions on Counterparty Clearing Relationships (regulation 23.608). The Division noted that it was providing this relief for swap dealers in those jurisdictions to have “an opportunity to prepare for compliance” with the relevant regulations.
Under the other no-action letter, the Division stated that it will not recommend that the CFTC take enforcement action against a non-U.S. swap dealer established in the European Union or four other jurisdictions (generally, unless its ultimate parent is a U.S. swap dealer) for failure to comply with: (i) the reporting requirements with respect to its swaps with a non-U.S. counterparty that, generally, is not guaranteed by a U.S. person until December 1, 2014 (or, if earlier, 30 days after the issuance of a relevant substituted compliance determination); and (ii) the reporting requirements with respect to its swaps with a non-U.S. counterparty that, generally, is guaranteed by a U.S. person until March 3, 2014 or April 2, 2014 (depending on when the swap was entered into).
 See, e.g., Comparability Determination for the European Union: Certain Transaction-Level Requirements, 78 Fed. Reg. 78,878 (December 27, 2013).
The “entity-level” requirements relate to: (i) capital adequacy; (ii) chief compliance officer; (iii) risk management; (iv) swap data recordkeeping; (v) swap data repository reporting; and (vi) physical commodity large swaps trader reporting.
The “transaction-level” requirements include: (i) required clearing and swap processing; (ii) margining (and segregation) for uncleared swaps; (iii) mandatory trade execution; (iv) swap trading relationship documentation; (v) portfolio reconciliation and compression; (vi) real-time public reporting; (vii) trade confirmation; (viii) daily trading records; and (ix) external business conduct standards.
 Exemptive Order Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 43,785 (July 22, 2013).
 CFTC Letter No. 13-78, Re: Time-Limited No-Action Relief from Certain Entity-Level Internal Business Conduct Requirements for Certain Swap Dealers and Major Swap Participants Established under the Laws of Australia, Canada, the European Union, Japan, and Switzerland (December 20, 2013); CFTC Letter No. 13-75, Re: Time-Limited No-Action Relief from Certain Requirements of Part 45 and Part 46 of the Commission’s Regulations for Certain Swap Dealers and Major Swap Participants Established under the Laws of Australia, Canada, the European Union, Japan or Switzerland (December 20, 2013).
 See CFTC Letter No. 13-78. In this letter, the Division also stated that it will not recommend that the CFTC take enforcement action prior to March 3, 2014 against a non-U.S. swap dealer established in Switzerland for failure to comply with the entity-level requirements of Dodd-Frank relating to Clearing Member Risk Management (regulation 23.609).
 See CFTC Letter No. 13-75.
On January 3, 2014, the Commodity Futures Trading Commission (“CFTC”) issued a no-action letter further delaying until September 15, 2014 the effectiveness of a November 14, 2013 advisory regarding the applicability of certain Dodd-Frank requirements to activities that occur in the United States (the “Advisory”). A previous no-action letter, issued on November 26, 2013, had delayed the effectiveness of the Advisory until January 14, 2014.
The Advisory generally provides that a non-U.S. swap dealer registered with the CFTC must comply with “transaction-level” requirements of Dodd-Frank when entering into a swap with a non-U.S. person if the swap is “arranged, negotiated, or executed by personnel or agents” of the non-U.S. swap dealer located in the United States.
In conjunction with the issuance of this latest no-action letter, the CFTC also issued a notice of request for public comment on all aspects of the Advisory.
 CFTC Letter No. 14-01, Re: Extension of No-Action Relief: Transaction-Level Requirements for Non-U.S. Swap Dealers (January 3, 2014); CFTC Staff Advisory No. 13-69, Applicability of Transaction-Level Requirements to Activity in the United States (November 14, 2013).
 CFTC Letter No. 13-71, Re: No-Action Relief: Certain Transaction-Level Requirements for Non-U.S. Swap Dealers (November 26, 2013).
 The “transaction-level” requirements include: (i) required clearing and swap processing; (ii) margining (and segregation) for uncleared swaps; (iii) mandatory trade execution; (iv) swap trading relationship documentation; (v) portfolio reconciliation and compression; (vi) real-time public reporting; (vii) trade confirmation; (viii) daily trading records; and (ix) external business conduct standards. These requirements are separated into “Category A” and “Category B” requirements, the latter of which includes solely external business conduct standards.
 See CFTC Staff Advisory No. 13-69, Applicability of Transaction-Level Requirements to Activity in the United States (November 14, 2013).
 Request for Comment on Application of Commission Regulations to Swaps Between Non-U.S. Swap Dealers and Non-U.S. Counterparties Involving Personnel or Agents of the Non-U.S. Swap Dealers Located in the United States (available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/federalregister010314.pdf).
On December 5, 2013, the Internal Revenue Service issued final regulations and proposed regulations under section 871(m), which address withholding on certain equity-linked notional principal contracts and other financial instruments. These regulations are targeted at derivatives referencing U.S. stocks in which non-U.S. persons receive a “dividend equivalent” while arguably avoiding U.S. withholding tax but will impact many common corporate transactions, including merger and acquisition transactions and equity based compensation arrangements. Click here to read more about this recent development.
On December 4, 2013, the Securities Industry and Financial Markets Association, the International Swaps and Derivatives Association, Inc., and the Institute of International Bankers filed a lawsuit challenging the CFTC’s final cross-border guidance issued in July of 2013 (the “Guidance”). The amended complaint primarily argues that, in issuing the Guidance, the CFTC issued “a sweeping, international compliance directive that it characterized as mere ‘guidance,’” instead of promulgating an actual rule governing the extraterritorial reach of the rules under Title VII of the Dodd-Frank Act that complied with the requirements of the Administrative Procedure Act (“APA”) and the Commodity Exchange Act (“CEA”), such as cost-benefit analysis. Put simply, the plaintiffs argue that the CFTC “purposefully circumvented the congressionally-required procedures for CFTC rulemaking.” Despite its purported status as mere non-binding guidance, the amended complaint notes that the CFTC has repeatedly made clear that the Guidance is intended to bind the CFTC staff and the public in the manner of a rule. The amended complaint further argues that, in promulgating many Title VII rules (such as the clearing requirement rule and the swap data repository reporting rule), despite public comments, the CFTC failed to address how those rules would apply extraterritorially and failed to consider the costs and benefits of the application of the rules to foreign entities and entities engaged in cross-border transactions.
More specifically, the plaintiffs make the following arguments. First, the CEA provides that the promulgation of any “regulation” by the CFTC requires the evaluation of the costs and benefits of the proposed rule in light of various considerations. However, the CFTC did not engage in any cost-benefit analysis before issuing the Guidance, despite its rule-like binding effect. Second, the APA requires that an agency give interested persons sufficient opportunity to participate in a rulemaking. Among other issues, fair notice was not given of how the Guidance would expand the extraterritorial application of the Title VII rules. Third, an agency is required under the APA to respond adequately to public comments before promulgating a rule, which the CFTC failed to do in connection with the Guidance. Fourth, the APA forbids an agency from acting in an “arbitrary” or “capricious” manner in adopting new rules. The Guidance failed to explain the application of Dodd-Frank swaps provisions to non-U.S. entities, and, given the attenuated connection of such entities to the United States, such application qualifies as arbitrary and capricious. Fifth, the CEA provides that the application of Dodd-Frank swaps provisions to activities outside of the United States requires “a direct and significant connection with activities in, or effect on, commerce of the United States.” But pursuant to the Guidance, certain entities and transactions, such as non-U.S. affiliate conduits, may be regulated despite lacking a “direct and significant” connection with or effect on U.S. commerce. Sixth, the CFTC promulgated the Title VII rules without evaluating their costs and benefits and responding adequately to public comments with respect to their cross-border application, issuing the guidance instead for that purpose.
The amended complaint therefore asks that the court, inter alia: (i) vacate and set aside the guidance in its entirety; and (ii) enjoin the CFTC from applying or enforcing the Title VII rules extraterritorially until promulgating a cross-border rule consistent with the APA and the CEA.
 Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 45,292 (July 26, 2013). The Guidance and related topics have been addressed previously in Derivatives in Review. See “‘U.S. Person’ Definitions Under the Final Exemptive Order and the Final Guidance, Application to Certain Foreign Branches, and Determination for Collective Investment Vehicles” posted on August 26, 2013.
 Amended Complaint, Securities Industry and Financial Markets Association v. CFTC, Civil Action No. 13-CV-1916 (D.D.C. Dec. 27, 2013).
 Id. at 3.
 Id. at 2. The complaint notes that Commissioner O’Malia has indicated his concern as well, stating that “[a]voiding cost-benefit analysis by labeling the document as guidance is unacceptable.” Id. at 4.
 Id. at 29.
 Id. at 3.
 Id. at 10-29.
 Id. at 52-53.
 Id. at 53-54.
 Id. at 54-55.
 Id. at 55-56.
 Id. at 56-57.
 Id. at 59.
 Id. at 64.
Use of the “end-user exception” to the Dodd-Frank clearing requirements for swaps subject to a clearing determination by the Commodity Futures Trading Commission (“CFTC”) requires that the end-user, among other things, not be a “financial entity” under the Commodity Exchange Act (“CEA”). The definition of “financial entity” encompasses, among other persons, commodity pools. In turn, the CEA defines a “commodity pool” as “any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests[.]” The Dodd-Frank Act expanded the scope of such “commodity interests” to include “swaps,” which has broadened the term significantly. Moreover, the CFTC has long interpreted the requirement that an enterprise be operated “for the purpose” of trading in commodity interests quite broadly, such that almost any trading in swaps or other commodity interests could bring an entity within the definition of a commodity pool. Recently the CFTC stated, “any swaps activities undertaken by a [commodity pool operator] would result in that entity being required to register because there would be no de minimis exclusion for such activity. As a result, one swap contract would be enough to trigger the registration requirement.” Additionally, the CFTC recently noted that “it is the staff’s position that wholly owned subsidiaries of commodity pools trading in derivatives are themselves commodity pools.” Therefore, taken together, these provisions and guidance suggest that an entity that is a wholly owned subsidiary of a commodity pool and enters into a swap may itself constitute a “commodity pool” and, therefore, would not be eligible to use the end-user exception to the clearing requirement.
However, the CFTC has indicated at various times that an operating company should not be considered a commodity pool. For example, under the CFTC’s rules further defining the term “swap dealer” and certain other critical terms under the Dodd-Frank Act, the CFTC appears to have drawn a distinction between commodity pools and “entities other than commodity pools (e.g., operating companies).” Also, the CFTC concluded that a limited partnership engaged in pork products was not a commodity pool despite hedging its production costs. More recently, the CFTC provided an interpretation that certain real estate investment trusts that hold income producing real estate and engage in real estate management activities (known as “equity REITs”) did not constitute commodity pools under the CEA, despite their use of derivatives because, generally, the REITs primarily derived their income from the ownership and operation of real estate and used derivatives for the limited purpose of mitigating currency and interest rate risk.
It remains unclear whether an entity exhibiting characteristics of an operating company (for example, a project company having the primary purpose of constructing and operating an energy plant) that enters into swaps constitutes a commodity pool, particularly if that company is a wholly owned subsidiary of an investment fund or other entity that is a commodity pool. However, despite the lack of definitive guidance, the CFTC’s longtime indications that operating companies are not commodity pools may suggest that even such a project company does not constitute a commodity pool.
 See CFTC Regulation 39.6.
 7 U.S.C. § 2(h)(7)(C)(i).
 7 U.S.C. § 1a(10).
 See id.
 See, e.g., Revisions of Commodity Pool Operator and Commodity Trading Advisor Regulations; Delegation of Authority, 46 Fed. Reg. 26004 (May 8, 1981).
 Commodity Pool Operations and Commodity Trading Advisors: Compliance Obligations; Harmonization of Compliance Obligations for Registered Investment Companies Required To Register as Commodity Pool Operators; Final Rule and Proposed Rule, 77 Fed. Reg. 11,252, 11,258 (February 24, 2012).
 Division of Swap Dealer and Intermediary Oversight Responds to Frequently Asked Questions – CPO/CTA: Amendments to Compliance Obligations (available at: http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/faq_cpocta.pdf).
 Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant” and “Eligible Contract Participant”, 77 Fed. Reg. 30,596, 30,653 (May 23, 2012).
 CFTC Staff Letter No. 00-89 (September 11, 2000).
 CFTC Letter No. 12-13, Re: Request for Interpretation of the Definition of “Commodity Pool” under Section 1a(10) of the Commodity Exchange Act (October 11, 2012).
The cross-border application of Title VII of the Dodd-Frank Act has been a vexing question for regulators. A major factor determining the ultimate reach of such swap regulation is the definition of “U.S. person” for purposes of the regulators’ guidance and other pronouncements regarding cross-border regulation.
On January 7, 2013, the CFTC published in the Federal Register a final order  (the “January Order”), which set forth a temporary “U.S. person” definition and provided temporary relief from certain provisions of the Dodd-Frank Act relating to swaps. The January Order expired on July 12, 2013, but on that same day the CFTC approved a new exemptive order  (the “July Order”) providing “temporary conditional relief effective upon the expiration of the January Order in order to facilitate transition to the Dodd-Frank Swaps regime.”  Although the July Order states that, “the Commission does not believe that an extension of the January Order is necessary or appropriate,”  the July Order in effect simply extends many provisions of the January Order until 75 days after the publication in the Federal Register of the related final guidance  (the “Final Guidance”), which the CFTC also approved on July 12, 2013. The Final Guidance was published in the Federal Register on July 26, 2013, making the extension date October 9, 2013.
Significantly, the July Order extends until October 9, 2013 the “U.S. person” definition exactly as it was set forth in the January Order.  Upon the expiration of this definition on October 9, 2013, the “U.S. person” definition set forth in the Final Guidance will apply. The Final Guidance provides that the CFTC will interpret the term “U.S. person” generally to include, but not be limited to:
(i) any natural person who is a resident of the United States;
(ii) any estate of a decedent who was a resident of the United States at the time of death;
(iii) any corporation, partnership, limited liability company, business or other trust, association, joint-stock company, fund or any form of enterprise similar to any of the foregoing (other than an entity described in prongs (iv) or (v), below) (a “legal entity”), in each case that is organized or incorporated under the laws of a state or other jurisdiction in the United States or having its principal place of business in the United States;
(iv) any pension plan for the employees, officers or principals of a legal entity described in prong (iii), unless the pension plan is primarily for foreign employees of such entity;
(v) any trust governed by the laws of a state or other jurisdiction in the United States, if a court within the United States is able to exercise primary supervision over the administration of the trust;
(vi) any commodity pool, pooled account, investment fund, or other collective investment vehicle that is not described in prong (iii) and that is majority-owned by one or more persons described in prong (i), (ii), (iii), (iv), or (v), except any commodity pool, pooled account, investment fund, or other collective investment vehicle that is publicly offered only to non-U.S. persons and not offered to U.S. persons;
(vii) any legal entity (other than a limited liability company, limited liability partnership or similar entity where all of the owners of the entity have limited liability) that is directly or indirectly majority-owned by one or more persons described in prong (i), (ii), (iii), (iv), or (v) and in which such person(s) bears unlimited responsibility for the obligations and liabilities of the legal entity; and
(viii) any individual account or joint account (discretionary or not) where the beneficial owner (or one of the beneficial owners in the case of a joint account) is a person described in prong (i), (ii), (iii), (iv), (v), (vi), or (vii). 
The Final Guidance definition is similar to the temporary definition, but broader. For example, the temporary definition does not include an equivalent of prong (vi) above relating to legal entities that are majority-owned by persons that constitute U.S. Persons and which bear unlimited responsibility for the obligations and liabilities of the legal entity. Moreover, the Final Guidance provides explanation on each prong of the foregoing definition and makes some important clarifications.
Once such clarification is that a foreign branch of a U.S. bank registered with the CFTC as a “swap dealer” (an “SD Foreign Branch”) is a “U.S. person” for purposes of the CFTC’s Dodd-Frank regulations. However, generally speaking, the Final Guidance permits “substituted compliance” by an SD Foreign Branch that enters into a swap with a non-U.S. counterparty for one of more Dodd-Frank requirements if the CFTC has made a determination of comparability with respect to those regulatory requirements (a “Substituted Compliance Determination”). Specifically: (i) with respect to “Category A Transaction-Level Requirements,”  an SD Foreign Branch may comply with the requirements of the local law and regulations in the foreign location of the branch in lieu of compliance with Dodd-Frank where a Substituted Compliance Determination has been made and (ii) with respect to “Category B Transaction-Level Requirements,”  an SD Foreign Branch need not comply with such requirements unless its swap counterparty is a U.S. person (other than another SD Foreign Branch). The CFTC has not yet issued any Substituted Compliance Determinations, although it is currently considering substituted compliance applications submitted by six jurisdictions: Australia, Canada, the European Union, Hong Kong, Japan and Switzerland.
Another important clarification is the application of a “principal place of business” test for purposes of determining whether a collective investment vehicle constitutes a U.S. person (under prong (iii) of the definition). In particular, the Final Guidance states that the determination of the principal place of business for a collective investment vehicle generally should depend on the location of the “actual center of direction, control and coordination,” that is the “nerve center”  of the vehicle. The Final Guidance further highlights that “[t]he key personnel relevant to this aspect of the analysis are those senior personnel responsible for implementing the vehicle’s investment strategy and its risk management. Depending on the vehicle’s investment strategy, these senior personnel could be those responsible for investment selections, risk management decisions, portfolio management, or trade execution.”  In sum, the Final Guidance provides that a collective investment vehicle’s principal place of business will be the United States “if the senior personnel responsible for either (1) the formation and promotion of the collective investment vehicle or (2) the implementation of the vehicle’s investment strategy are located in the United States, depending on the facts and circumstances that are relevant to determining the center of direction, control and coordination of the vehicle.” 
The CFTC has encouraged requests to provide written advice and guidance as to the application of the definition of “U.S. person,”  apparently recognizing that ambiguities may remain despite publication of the Final Guidance.
 Final Exemptive Order Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 858 (January 7, 2013).
 Exemptive Order Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 43,785 (July 22, 2013).
 Id. at 43,785.
 Id. at 43,786.
 Interpretive Guidance and Policy Statement Regarding Compliance with Certain Swap Regulations, 78 Fed. Reg. 45,292 (July 26, 2013). Note that, in addition to its interpretation of “U.S. person,” the Final Guidance covers various other issues in the cross-border context, including swap dealer and major swap participant registration, interpretation of “foreign branch,” application of the Dodd-Frank Title VII requirements to various types of market participants, and substituted compliance.
 July Order, supra note 2, at 43,787. The January Order stated that the CFTC “will treat as a ‘U.S. person’ any person identified by the following five criteria”:
(i) A natural person who is a resident of the United States;
(ii) A corporation, partnership, limited liability company, business or other trust, association, joint-stock company, fund or any form of enterprise similar to any of the foregoing, in each case that is (A) organized or incorporated under the laws of a state or other jurisdiction in the United States or (B) effective as of April 1, 2013 for all such entities other than funds or collective investment vehicles, having its principal place of business in the United States;
(iii) A pension plan for the employees, officers or principals of a legal entity described in (ii) above, unless the pension plan is primarily for foreign employees of such entity;
(iv) An estate of a decedent who was a resident of the United States at the time of death, or a trust governed by the laws of a state or other jurisdiction in the United States if a court within the United States is able to exercise primary supervision over the administration of the trust; or
(v) An individual account or joint account (discretionary or not) where the beneficial owner (or one of the beneficial owners in the case of a joint account) is a person described in (i) through (iv) above.
 Id. at 45,316-17.
 “Category A Transaction-Level Requirements” consist of the following Dodd-Frank Act requirements: (1) clearing and swap processing; (2) margin and segregation requirements for uncleared swaps; (3) trade execution; (4) swap trading relationship documentation; (5) portfolio reconciliation and compression; (6) real-time public reporting; (7) trade confirmation; and (8) daily trading records.
 “Category B Transaction-Level Requirements” consist of Dodd-Frank requirements regarding external business conduct standards (including those currently being addressed through the August 2012 Dodd-Frank Protocol and similar arrangements).
 Id. at 45,309 (citing Hertz Corp. v. Friend, 559 U.S. 77 (2010)).
 Id. at 45,310 (footnotes omitted). The Final Guidance elaborates:
The achievement of a collective investment vehicle’s investment objectives may be closely linked to its formation. Decisions made in the structuring and formation of the collective investment vehicle may have a significant effect on the performance of the vehicle. Thus, for purposes of identifying the vehicle’s principal place of business, the Commission may also consider the location of the senior personnel who direct, control and coordinate the formation of the vehicle (i.e., the promoters). The location of the promoters of the collective investment vehicle is relevant, particularly where the vehicle has a specialized structure or where the promoters of the vehicle continue to be integral to the ongoing success of the fund, including by retaining overall control of the vehicle.
 Specifically, the Final Guidance notes that: “The [CFTC] believes that [CFTC] regulation 140.99, which provides for persons to request that the staff of the [CFTC] provide written advice or guidance, would be an appropriate mechanism for a person to seek guidance as to whether it is a U.S. person for purposes of applying the [CFTC] swaps regulations promulgated under Title VII [of the Dodd-Frank Act].” Final Guidance, supra note 4, at 45,316 n.235.
The governments of Europe continue to consider the application of a financial transaction tax (“FTT”) on bond, equity and derivatives transactions. On February 14, 2013, the European Commission (“EC”) published a directive (the “FTT Directive”) that would apply to eleven member-states through an “enhanced cooperation procedure” approved by the European Parliament on December 12, 2012. Most recently, on July 3, 2013, the European Parliament, which has a consultative role in the process, approved the FTT Directive, subject to several proposed amendments.
At its heart, the FTT Directive would continue to provide for participating member-states setting tax rates of at least 0.1% of the consideration paid or owed in a financial transaction other than a derivative transaction, and at least 0.01% of the notional amount of a derivative transaction. However, the European Parliament proposed, among others, the following amendments to the FTT Directive: (i) having lower “transitional” rates apply until January 1, 2017 on (x) trades relating to sovereign bonds, including a rate of 0.005% on derivatives and (y) stocks, bonds and derivatives traded by pension funds; (ii) permitting participating member-states to apply higher tax rates to riskier “over the counter” trades; (iii) having reduced rates of 0.01% apply to short-term (i.e., maturities of three months or less) repurchase transactions and reverse repurchase transactions; (iv) providing an exemption for market-makers (referred to as “liquidity providers”); (v) clarifying that the critical definition of “financial transaction” includes contracts for difference, speculative forward transactions and currency spots on FX markets; and (vi) clarifying that branches of financial institutions that have their registered office in a participating member-state fall under the scope of the FTT Directive.
Despite the European Parliament’s approval of the FTT Directive, the content of the FTT—and the date of its effectiveness—are far from resolved. The FTT Directive originally was to become effective on January 1, 2014, but that seems highly unlikely now, especially since the participating member-states themselves are still not in agreement as to the scope of the FTT.
Significantly, on July 16, 2013, French Finance Minister Pierre Moscovici lamented the current lack of support for the levy across all EU member-states and recommended that the scope of the tax be widened to include currency transactions. In addition, he advocated that the “issuance” principle be applied to the tax, to ensure that transactions are taxed in the place where the financial product is issued; this is in contrast to the FTT Directive, which favors application of the “residence” principle, under which taxes are imposed where parties to the transaction are established. Moscovici also argued that “repo” transactions should not fall within the scope of the FTT Directive because doing so would pose significant risk to the credit markets due to the central role of such transactions in the liquidity balance between commercial banks.
In the United Kingdom, which is not one of the eleven participating member-states, a Parliamentary Committee recently recommended that the Government consider the “viability, benefits and risks” of an FTT on high frequency trading, despite the Government’s strong opposition to such a tax within the EU.
 FTT initiatives and developments have been addressed previously in Derivatives in Review. See “Financial Transaction Tax Developments” posted on June 11, 2013; “Europe Proposes Financial Transaction Tax” posted on October 15, 2011; and “Financial Transaction Tax” posted on February 15, 2012.
 European Commission, Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax, 2013/0045 (CNS), Brussels, 14.2.2013. This directive was published after an earlier attempt to impose an FTT in 2011 failed to attract the necessary unanimous support of all of the EU member-states. After this failure, eleven EU member-states applied to impose an FTT themselves, which resulted in the FTT Directive. These eleven member-states are: Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain. These states account for the vast majority of the Eurozone’s gross domestic product.
 “Financial Transaction Tax under Enhanced Cooperation: Commission sets out the details,” European Commission – IP/13/115, February 14, 2013 (available at: http://europa.eu/rapid/press-release_IP-13-115_en.htm) (noting, among other things, that during the discussion period for the FTT Directive, “[t]he European Parliament will also be consulted.”)
 The EC’s FTT webpage itself hints that a six-month postponement is possible. Specifically, this web site provides that “[o]nce agreed upon at European level, participating Member States will have to transpose the [FTT Directive] into national legislation. If agreement is found before the end of 2013, and there is a speedy transposition into national law by the participating Member States, this common framework for an FTT could still enter into force towards the middle of 2014.”
End-users in the United States traditionally have entered into swaps with counterparties that, following the implementation of the Dodd-Frank Act, registered with the CFTC as “swap dealers.” Pursuant to CFTC regulation 45.8, where one party to a swap is a registered swap dealer, that party (known as the “reporting counterparty”) is the one required to report relevant swap data to a “swap data repository” (“SDR”). The reporting requirements of the Dodd-Frank Act apply to new swaps, as well as swaps existing on or after the enactment of the Dodd-Frank Act but entered into before the required reporting date (known as “historical swaps”). The exact compliance date for reporting historical swap data depends on the type of swap and the type of reporting counterparty; for example, swap dealers were required to report swap data for interest rate swaps by October 12, 2012. However, where neither party is registered as a swap dealer, an end-user that is the sole “U.S. person” to a swap may find itself in the position of being the reporting counterparty. In such a case, the end-user has been granted additional time to comply with the Dodd-Frank reporting requirements.
As a general rule, in accordance with a CFTC No-Action Letter, “[a] non-SD/MSP counterparty [i.e., a non-swap dealer or major swap participant] is required to be in compliance with its reporting obligations under the swap data reporting rules by April 10, 2013.” However, the same No-Action Letter provided that “the Division [of Market Oversight] will not recommend that the [CFTC] take enforcement action against a non-financial swap counterparty for failing to report historical swaps data, for all swap asset classes, pursuant to Part 46 of the [CFTC’s] regulations, until 12:01 a.m. eastern time on October 31, 2013.” Therefore, end-users have until such date and time to report historical swap data.
Of course, end-users usually enter into swaps on one-off occasions, for example, to hedge interest rate risk relating to a borrowing. Therefore, they often lack the necessary infrastructure and operational capability to routinely report trades. As an accommodation, certain non-U.S. financial institutions that are not registered as swap dealers have offered to enter into contracts with end-users under which the financial institutions agree to report historical swap data to SDRs. However, not all non-U.S. financial institutions have offered to provide such an accommodation; in such cases, it may be helpful for an end-user to engage a third party service provider to assist it with its reporting obligations.
Note that both reporting counterparties and non-reporting counterparties have an obligation to correct errors and omissions of swap data previously reported to an SDR. Specifically, CFTC regulation 45.14 provides that “[c]orrections of errors or omissions shall be reported [by a reporting counterparty] as soon as technologically practicable after discovery of any such error or omission.” Moreover, a non-reporting counterparty that discovers any error or omission “shall promptly notify the reporting counterparty of each such error or omission” and “[u]pon receiving such notice, the reporting counterparty shall report a correction of each such error or omission to the swap data repository.”
 Specifically, CFTC regulation 45.8 provides that “if both counterparties to a swap are non-SD/MSP counterparties [i.e., non-swap dealers or major swap participants] and only one counterparty is a U.S. person, that counterparty shall be the reporting counterparty.”
 CFTC Letter No. 13-10, “Time-Limited No-Action Relief for Swap Counterparties That Are Not Swap Dealers or Major Swap Participants, from Certain Swap Data Reporting Requirements of Parts 42, 45 and 46 of the Commission’s Regulations” (April 9, 2013), 3.
 Id. at 6.
 17 C.R.F. § 45.14.