On September 15, pursuant to Section 1601 of the Dodd-Frank Act, the IRS proposed rules amending existing regulations regarding Sections 1256 and 446 of the Internal Revenue Code. The proposed rules provide guidance on the category of swaps and similar agreements that fall within the scope of Section 1256(b)(2)(B) and as a result are excluded from the definition of a Section 1256 contract. The proposed rules also expand the definition of a notional principal contract under Section 446 to include swaps on non-financial indices. Comments must be received by December 15. IRS Proposed Rules.
Dodd-Frank Act
SEC Report on NRSROs
On September 30, the SEC issued its annual report, as required under the Dodd-Frank Act, summarizing its findings after examining the practices of credit rating agencies registered with the SEC as NRSROs and subject to SEC oversight. The concerns outlined in the report include, in some instances, apparent failures by NRSROs to: (i) follow rating methodologies and procedures; (ii) make timely and accurate disclosures; (iii) establish effective internal control structures for the rating process; and (iv) adequately manage conflicts of interest. SEC Release. SEC Report.
FDIC Proposed Rule on Noninterest-Bearing Transaction Accounts
On September 27, the FDIC Board approved the issuance of a proposed rule implementing provisions of the Dodd-Frank Act by providing unlimited deposit insurance coverage on noninterest-bearing transaction accounts from December 31, 2010 through December 31, 2012. FDIC Proposed Rule.
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.
SEC Extends Ford Motor Credit “No Action” Letter
On November 23, the SEC extended indefinitely the Ford Motor Credit “no-action” letter allowing issuers of ABS to omit credit ratings from registration statements filed under Regulation AB. The “no-action” letter was originally issued on July 22 in response to the repeal of Rule 436(g) as a result of the Dodd-Frank Act, which subjects credit rating agencies to expert liability for ratings disclosure. SEC Updated No-Action Letter.
Implementation of Volcker Rule
On November 17, the Fed issued a proposed rule which would implement the conformance period (generally two years) during which banking entities and nonbank financial companies under the Fed’s supervision must comply with the Volcker Rule imposed by the Dodd-Frank Act. Comments on the proposed rule must be submitted within 45 days after publication in the Federal Register. Fed Release. Proposed Rule.
Temporary Unlimited Coverage for Noninterest-Bearing Transaction Accounts
On November 9, the FDIC approved a final rule to implement Section 343 of the Dodd-Frank Act which provides temporary unlimited deposit insurance coverage for noninterest-bearing transaction accounts. The coverage becomes effective on December 31, 2010 and ends on December 31, 2012. FDIC Release. FDIC Rule.
FDIC Proposals on Assessment Changes
On November 9, the FDIC proposed two rules which amend the deposit insurance assessment regulations. The proposed rules would: (i) implement a provision in the Dodd-Frank Act that changes the assessment base so that it is based on assets rather than domestic deposits and (ii) change the deposit insurance assessment system for large institutions. The proposed rules would be effective on April 1, 2011. Comments on both proposed rules must be submitted within 45 days of publication in the Federal Register. FDIC Release. FDIC Proposed Rule 1. FDIC Proposed Rule 2.
SEC Whistleblower Program Proposal
On November 3, the SEC proposed rules and forms to implement Section 21F of the Securities Exchange Act of 1934, entitled “Securities Whistleblower Incentives and Protection“, which was added under the Dodd-Frank Act. Comments on the proposed rules must be submitted by December 17. SEC Release. SEC Proposed Rule.
SEC Proposed Security-Based Swaps Fraud Prevention Rule
On November 3, the SEC, as required by the Dodd-Frank Act, proposed a rule to help prevent fraud, manipulation, and deception in connection with security-based swaps. Comments on the proposed rule must be submitted within 45 days of publication in the Federal Register. SEC Release. SEC Proposed Rule.