On November 18, the U.S. Treasury Department and Internal Revenue Service (IRS) released guidance clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. Release.
On November 18, the Commodity Futures Trading Commission (CFTC) unanimously approved a final rule establishing a framework for the Commission to grant an exemption from registration as a derivatives clearing organization (DCO) to a clearing organization organized outside of the United States for the purpose of clearing proprietary swap transactions for U.S. persons. Section 5b(h) of the Commodity Exchange Act permits the CFTC to exempt a non-U.S. clearing organization from registration for clearing swaps if the CFTC determines that the clearing organization is subject to comparable, comprehensive supervision and regulation by its home country authorities. Therefore, financial institutions may have more options for central clearing counterparties to clear swaps that they enter into that are subject to a clearing mandate by the CFTC – namely, derivatives clearing organizations organized outside of the U.S., so long as the CFTC determines that they are subject to comparable, comprehensive supervision and regulation by the relevant local authorities in the jurisdiction of their organization. Final Rule.
On November 18, the CFTC unanimously approved a final rule amending certain parts of its regulations relating to the execution of “package transactions” on swap execution facilities (SEFs) and the resolution of error trades on SEFs. The final rule amends part 37 of CFTC regulations to allow the swap components of certain categories of package transactions to be executed on SEF but through flexible means of execution rather than through the required methods of execution for “required transactions.” Release.
On November 13, the FHFA announced that it will extend several loan origination flexibilities until December 31 that were set to expire on November 30. The extended flexibilities include alternative appraisals on purchase and rate term refinance loans, alternative methods for documenting income and verifying employment before loan closing and expanding the use of power of attorney to assist with loan closings. Release.
On November 2, the Commodity Futures Trading Commission (CFTC) approved a final rule exempting swaps entered into by certain financial institutions from the CFTC’s swap-clearing requirement under the Commodity Exchange Act (CEA). The exemption applies to swaps entered into by certain central banks, sovereign entities, international financial institutions, bank holding companies, savings and loan holding companies and community development financial institutions. Release.
On November 2, the CFTC issued multiple orders as part of its Part 30 exemptive program, which allows for increased access to foreign futures and options markets where foreign intermediaries are subject to comparable customer protection standards. The orders were issued with respect to the Bombay Stock Exchange, the National Stock Exchange International Financial Service Centre Limited, the Montreal Exchange, NZX Limited and UBS AG. Release.
On November 2, the Securities and Exchange Commission (SEC) amended its rules governing exempt offerings. The amendments intend to harmonize the “patchwork” framework currently in place that governs exempt offerings. Among other things, the amendments increase the offering limits for Regulation A, Regulation Crowdfunding and Rule 504 offerings, revise certain individual investment limits, and set clear and consistent rules regarding certain offering communications. Release.
On November 2, the SEC adopted final rule 18f-4 under the Investment Company Act. The new rule intends to update the regulation of funds’ use of derivatives. Under the new framework, funds using derivatives will generally have to adopt a derivatives risk-management program administered by a derivatives risk manager and comply with an outer limit on fund leverage risk based on certain calculations. Final Rule.
On October 30, the Federal Reserve Board (FRB) announced adjustments to the Main Street Lending Program in an effort to better support smaller businesses. The changes include reducing the minimum required loan size to $100,000 from $250,000 and adjusting the fees to encourage eligible lenders to provide these smaller loans. Release.
On October 29, the Consumer Financial Protection Bureau (CFPB) issued a final rule amending its disclosure of records and information regulation. The new rule intends to increase protection of confidential information and improve clarity and transparency with agency partners and others. Final Rule.
