Commodity Exchange Act

CFTC Final Regulations on Phase in Compliance with Clearing Requirements and Proposed Rule on Clearing Determination

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.

CFTC Final Order on the Effective Date for Swap Regulation

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.

CFTC Approves Guidance on Cross-Border Application of Swaps Provisions of Dodd-Frank

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.

CFTC Proposed Extension of the Effective Date for Swap Regulation

On October 18, the CFTC proposed to amend a final order issued on July 14 granting temporary exemptive relief from certain provisions of the Commodity Exchange Act that would have taken effect on July 16. The proposed order would extend such exemptive relief from December 31 to July 16, 2012. The original order grants relief from: (i) provisions added or amended by Title VII of the Dodd-Frank Act that reference one or more terms regarding entities or instruments that Title VII requires to be further defined and (ii) provisions that may apply to certain agreements, contracts, and transactions in exempt or excluded commodities as a result of the repeal of various CEA exemptions and exclusions. CFTC Fact Sheet.

CFTC Proposed Implementation Schedule For New Swap Requirements

On September 8, pursuant to Sections 723(a)(3) and 723(a)(8) of the Dodd-Frank Act, the CFTC proposed amendments to regulations to phase in compliance dates for the new clearing and trade execution requirements for swaps under Sections 2(h)(1), 2(h)(2) and 2(h)(8) of the Commodity Exchange Act. Comments must be submitted within 45 days after publication in the Federal Register. CFTC Fact Sheet. CFTC Proposed Rules.

The CFTC also proposed rules, pursuant to Section 731 of the Dodd-Frank Act, establishing a schedule to phase in compliance with the new trading documentation and margin requirements for swaps under Sections 4s(i)(1) and 4s(e) of the Commodity Exchange Act. Comments must be submitted within 45 days after publication in the Federal Register. CFTC Fact Sheet. CFTC Proposed Rules.

CFTC Approval of Final Rules under Dodd-Frank Act

On July 7, the CFTC approved five final rules under the Dodd-Frank Act at an open meeting. The CFTC (i) approved the definition of “Agricultural Commodity” for purposes of Commodity Exchange Act; (ii) adopted regulations, pursuant to Title X of the Dodd-Frank Act, requiring CFTC-regulated entities to provide consumers with an opportunity to prohibit affiliates from using certain information to make marketing solicitations, and to develop policies and procedures for the proper disposal of consumer report information; (iii) expanded the scope of Part 160 of its regulations, which requires entities to provide certain privacy protections for consumer financial information, to apply to swap dealers and major swap participants; and (iv) adopted reporting regulations requiring clearing organizations, clearing members and swap dealers to submit routine position reports for physical commodity swaps and swaptions. CFTC Rule on Agricultural Commodity Definition. CFTC Rule on Consumer Information under FCRA. CFTC Rule Expanding Scope of Part 160. CFTC Rule on Physical Commodity Swaps Reporting.

CFTC Proposed Rules to Adapt CFTC Regulations to New Commodity Exchange Act Definitions

On April 27, in accordance with Sections 721 and 733 of the Dodd-Frank Act, the CFTC proposed rules to revise its regulations to reflect: (i) amendments to the definitions of “futures commission merchant” and “introducing broker” in the Commodity Exchange Act and (ii) the creation of swap execution facilities as trading platforms for swaps. CFTC Fact Sheet. CFTC Proposed Rule.

CFTC and SEC Propose Rules for Swaps and Security-Based Swaps

On December 7, in accordance with the Dodd-Frank Act, the CFTC and the SEC proposed rules and interpretative guidance under the Commodity Exchange Act to further define the terms “swap dealer”, “security-based swap dealer”, “major swap participant”, “major security-based swap participant” and “eligible contract participant”. Comments must be submitted within 60 days of publication in the Federal Register. SEC Release.