On November 14, CFTC issued advisory on the applicability of Dodd-Frank transaction-level requirements to swaps between non-U.S. swap dealers (SDs) (whether or not an affiliate of a U.S. person) and non-U.S. persons if the swap is arranged, negotiated or executed by a non-U.S. SD located in the U.S. Advisory.
On September 18, the SEC voted 3-2 to propose a new rule requiring public companies to disclose the compensation ratio of CEO to the median compensation of its employees, as required by the Dodd-Frank Act. Under the proposal, companies would have the flexibility to determine the median annual total compensation of its employees in a way that best suits their circumstances. The proposal will be subject to a 60-day public comment period once it is published in the Federal Register. Press Release. Proposal.
On September 10, Orrick will host a Financial Industry Breakfast Briefing in our New York office. The briefing will cover the current state of the derivatives market with specific updates on the implementation of Dodd-Frank and recent litigation involving derivatives. Speakers include partners Steven Fink, Nikiforos Mathews and Thomas Mitchell. This course has been approved in accordance with the requirements of the Continuing Legal Education Board for a maximum of 1.0 credit hour. To register for this event, please click here.
On June 19, the Office of the Comptroller of the Currency (OCC) finalized the rule governing lending limits. The rule implements Section 610 of the Dodd Frank Wall Street Reform and Consumer Protection Act. Under the rule, the effective date has been extended to October 1st from July 1st, as proposed previously. OCC Release. Final Rule.
The market’s attention is fixed firmly on the future of derivatives. Questions about the implementation and impact of the Dodd Frank requirements, and to what extent the use of swaps in structured finance and other transactions will return, are front and center. And yet, there are also lessons to be learned from the past use of these somewhat esoteric financial instruments, which continue to be questioned and tested in litigation — with more to come. Orrick covered this topic in an article recently published in Law360.
On November 15, the SEC released its Fiscal Year 2012 Annual Report on the Dodd-Frank Whistleblower Program, the first full-year report issued since the enactment of Dodd-Frank. The Report analyzes the 3,001 tips received over the last twelve months by the Commission’s Office of the Whistleblower and provides additional information on the whistleblower award evaluation process that resulted in its first (and only) award issuance in August 2012. Please click here to read the Alert prepared by Orrick partner Mike Delikat and associate Rachel Coe.
On July 30, the Fed approved a final rule, Regulation HH, implementing provisions of sections 805(a) and 806(e) of the Dodd-Frank Act. The final rule establishes risk-management standards related to the payment, clearing, and settlement activities of certain financial market utilities (FMUs) designated as systemically important by the FSOC, and standards for determining when a designated FMU must provide advance notice of proposed changes to its rules, procedures, or operations. The rule will be effective on September 14. Fed Release. Final Rule.
On July 24, the CFTC approved final regulations establishing a schedule to phase in compliance with new clearing requirements under the Dodd-Frank Act. As amended by the Dodd-Frank Act, the Commodity Exchange Act provides that a person may not engage in a swap unless the swap is submitted for clearing to a derivatives clearing organization registered under the CEA, or is exempt from registration under the CEA. The regulations will phase in the clearing requirement based on the type of market participant entering into swaps subject to the clearing requirement. The compliance schedule identifies three categories of market participants, and allots a compliance timeframe for each based on level of activity, market experience, resources, and status as registrants with the CFTC or SEC. The CFTC also issued the first proposed clearing determination for credit default swaps and interest rate swaps. The compliance schedule will be triggered upon the final clearing determination. Final Rule Release. Final Rule. Proposed Rule Release. Proposed Rule.
On July 3, the OCC issued a final Order on the effective date for swap regulation. The OCC previously extended the temporary exemptive relief from the Commodity Exchange Act that otherwise would have taken effect on July 16, 2011, the general effective date of Title VII of the Dodd-Frank Act. The final Order extends the previous extension with certain modifications, including: (i) removing references to entities terms such as “swap dealer”, “major swap participant”, and “eligible contract participant”, (ii) extending the potential latest expiration of the Order to December 31 or, depending on the nature of the relief, such other date as determined by the Commission, (iii) allowing the clearing of agricultural swaps; and (iv) removing references to the exempt commercial market and board of trade grandfather relief. The Order is effective immediately. CFTC Release.
On June 29, the CFTC approved for public comment proposed interpretive guidance on the cross-border application of the swaps provisions of Title VII of the Dodd-Frank Act. The proposed guidance interprets Section 2(i) of the Commodity Exchange Act (CEA), which states that the swaps provisions of the CEA shall not apply to activities outside the United States unless those activities have a direct and significant connection with activities in, or effect on, commerce of the United States. Comments must be submitted within 45 days after publication in the Federal Register. CFTC Release.