Month: December 2015

Prudential Regulators Approve Final Uncleared Margin Rules

 

In October, the prudential regulators (i.e., the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Farm Credit Administration, and the Federal Housing Finance Agency) approved a final version (the “Final Rule”) of the September 2014 re-proposed rule generally imposing initial and variation margin requirements on certain banks and their counterparties in connection with non-cleared swaps and non-cleared security-based swaps.[1]  The Commodity Futures Trading Commission (“CFTC”) adopted its own final margin rules for uncleared swaps applicable to entities subject to its jurisdiction (i.e., non-bank swap dealers and non-bank major swap participants) on December 16, 2015, many significant provisions of which are substantially similar to those in the Final Rule.  The Securities and Exchange Commission (“SEC”) has proposed, but not finalized, margin rules for uncleared security-based swaps applicable to entities subject to its jurisdiction (i.e., non-bank security-based swap dealers and non-bank major security-based swap participants). READ MORE

Status of Security-Based Swap Regulation and the Related Cross-Border Framework, an Overview

 

The CFTC has now implemented many of the requirements applicable to swaps under Title VII of the Dodd-Frank Act.[1] In contrast, substantially all of the SEC’s rules under Title VII regulatory security-based swaps are not yet effective. However, the SEC has issued various proposed and final (but not yet effective) rules and indicated its “anticipated” sequencing of the relevant compliance dates. In addition, the SEC has issued various proposed and final rules pertaining to the cross-border application of such rules.  Set forth below is an overview of (i) the current status of the SEC’s implementation of Title VII requirements applicable to security-based swaps and (ii) the SEC’s cross-border framework, as it currently exists, for the regulation of security-based swaps.[2] READ MORE

CFTC Proposes “Regulation AT” on Automated Trading

 

On November 24, 2015, the Commodity Futures Trading Commission (“CFTC”) issued a notice of proposed rulemaking (the “Proposed Rule”) on the regulation of automated trading on U.S. designated contract markets (“DCMs”), which would be known as “Regulation AT (the “Proposed Rule”).[1]  A DCM is a board of trade or exchange designated by the CFTC to trade futures, swaps, or options.  The stated purpose of Regulation AT is to reduce risk and increase transparency through measures applicable to trading firms, clearing members and exchanges engaging in automated trading. READ MORE

CFTC Issues Swap Dealer De Minimis Exception Preliminary Report

 

On November 18, 2015, the Commodity Futures Trading Commission (“CFTC”) issued for public comment the Swap Dealer De Minimis Exception Preliminary Report (the “Preliminary Report”).[1]  The de minimis exception from the swap dealer (“SD”) registration requirement currently provides an $8 billion threshold (in aggregate gross notional swap dealing activity measured over the prior 12-month period).[2]  The $8 billion threshold, however, was intended as a “phase-in” amount under the Dodd-Frank Act, and is scheduled to decrease to $3 billion on December 31, 2017, unless the CFTC takes prior action to set a different termination date or to modify the de minimis exception.[3]  The Preliminary Report was issued by the CFTC to assess the de minimis exception and to allow public comment on the relevant policy considerations. Following publication of, and public comment on, a subsequent “final report,” the CFTC may either extend the phase-in period or issue a notice of proposed rulemaking to modify the de minimis exception.[4] READ MORE