Posts by: Nikiforos Mathews

NYDFS Finalizes BitLicense Regulations

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On June 3, 2015, the New York Department of Financial Services (“NYDFS”) released its final BitLicense regulations, which Superintendent Benjamin Lawsky described as “the first comprehensive framework for regulating digital currency firms.”[1]  As previously reported, the NYDFS originally released proposed BitLicense regulations on July 17, 2014.[2]  After receiving thousands of public comments, primarily voicing concern over the possible scope of regulation, the NYDFS made major revisions and released re-proposed BitLicense regulations on February 4, 2015.[3] READ MORE →

CFTC Exempts Certain Wholly-Owned Securitization SPVs from Mandatory Clearing

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On May 4, 2015, the Division of Clearing and Risk of the Commodity Futures Trading Commission (the “CFTC”) issued a no-action letter (the “Letter”)[1] clarifying that securitization special purpose vehicles (“SPVs”) that are wholly-owned by, and consolidated with, a “captive finance company” are eligible for the “end-user exception” in connection with clearing determinations issued by the CFTC under Section 2(h) of the Commodity Exchange Act, as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“CEA”).  The auto securitization industry, including Ford Motor Credit Company LLC, has been particularly focused on the interpretive relief provided by the Letter.[2] READ MORE →

NYDFS Releases Revised BitLicense Proposal

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On February 4, 2015, the New York State Department of Financial Services (“NYDFS”) released a revised version of its proposed virtual currency regulations (commonly referred to as “BitLicense”), originally released in July 2014. Nearly 4,000 formal comment letters were submitted by advocacy groups, financial service providers, law firms, individuals and others on the original proposal.  A 30-day public comment period began upon publication of the revised proposal in the New York State Register on February 25, 2015.  Section I below summarizes significant changes that the revised version of the BitLicense proposal made to the original, and Section II provides an outline of the overall proposed BitLicense regime, as amended. READ MORE →

CFTC Subcommittee Recommends Timeline for Clearing of Non-Deliverable Forwards

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On December 5, 2014, the Global Markets Advisory Committee, Foreign Exchange Markets Subcommittee (the “Subcommittee”) of the Commodity Futures Trading Commission (“CFTC”) submitted its recommendation to the Global Markets Advisory Committee on the timing of mandated clearing of foreign exchange non-deliverable forward (“NDF”) transactions.[1] READ MORE →

ISDA Webinar Addresses Development of a “Standard Initial Margin Model”

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In February 2015, the International Swaps and Derivatives Association, Inc. (“ISDA”) released a webinar on various issues related to the margin requirements for uncleared swaps.[1]  Specifically, the webinar: (i) covered the organizational structure of ISDA’s Working Group on Margin Requirements Implementation Initiative and each of the Initiative’s “workstreams” responsible for tasks associated with the margin rules (i.e., the Portfolio Integrity Workstream, the Margin & Collateral Workstream, the Risk Classification & Methodology Workstream, the Data Sources Workstream, the Dispute Resolution Workstream, and the Legal & Documentation Workstream); (ii) provided an update on ISDA’s efforts to develop, and obtain regulatory approval for, its “standard initial margin model” (“SIMM”), which is a standardized method for calculating  initial margin on uncleared swaps; and (iii) discussed significant legal and operational issues related to the implementation of the recently re-proposed uncleared swap margin regulations.[2] READ MORE →

The Bitcoin Marketplace and Regulatory Environment: An Overview

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In the fourth quarter of 2014, bitcoin’s volatile price generally fluctuated between $300 and $400, about one-third of its all-time peak of around $1,200 from one year before. Despite this price drop during 2014, startup companies and financial products focused on bitcoin continue to burgeon, and, in turn, various regulators have recently proposed regulations, made pronouncements, and taken enforcement actions related to bitcoin. Section I below outlines significant companies and products in the bitcoin space, and Section II summarizes the state of bitcoin regulation.[1] READ MORE →

English Court Addresses Derivatives Close-outs

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On July 29th, the High Court of Justice, Queen’s Bench Division, Commercial Court, issued an opinion[1] that addressed several issues regarding the calculation of early termination amounts under a standard derivatives master agreement, as well as the calculation of default interest under the master agreement.

In the case at issue, Lehman Brothers Finance S.A. (“LBF”) claimed that Sal. Oppenheim Jr. & Cie, KGAA (“Oppenheim”) had improperly calculated the early termination amount payable to LBF in connection with the termination of transactions governed by a 1992 ISDA Master Agreement under which “Market Quotation” had been selected as the payment measure. The transactions at issue were equity puts and calls that referred to the Nikkei 225 Stock Average Index (the “Index”). Pursuant to the terms of the master agreement between the parties, all transactions thereunder automatically terminated upon the bankruptcy filing of LBF’s parent, Lehman Brothers Holdings Inc. (“LBHI”), at 1:44 a.m. New York time on Monday, September 15, 2008. LBF itself went into liquidation in December 2008. READ MORE →

SFIG Provides Comment Letter on Re-Proposed Margin Rules for Uncleared Swaps

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On November 24th, the Structured Finance Industry Group (“SFIG”) submitted a comment letter[1] to the Board of Governors of the Federal Reserve System and other prudential regulators (the “Prudential Regulators”) and to the Commodity Futures Trading Commission (“CFTC”) relating to proposed margin requirements for securitization transaction swaps. READ MORE →

Prudential Regulators and CFTC Re-Propose Rules for Uncleared Swap Margin

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The “prudential regulators” (i.e., the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Farm Credit Administration, and the Federal Housing Finance Agency) re-proposed their April 2011 proposed rule imposing initial and variation margin requirements on banks and their counterparties in connection with uncleared swaps. The April 2011 proposed rule has been re-proposed rather than simply finalized in light of significant differences from the original proposal and the issuance of the 2013 final policy framework by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions. READ MORE →