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.
Dodd-Frank
FDIC Makes Available Parts of Resolution Plans
On July 3, the FDIC made available the public sections of the initial resolution plans submitted to the FDIC and the Fed under Title I of the Dodd-Frank Act. Firms in this group include U.S. bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets. FDIC Release. Summaries.
OCC Final Rules Removing Credit Ratings References
On June 13, the OCC published final rules, which will be effective on January 1, 2013, removing references to credit ratings from its regulations pertaining to investment securities, securities offerings, and foreign bank capital equivalency deposits. The OCC also revised regulations, which are effective immediately upon publication, regarding financial subsidiaries of national banks to better reflect the language of the underlying statute, as amended by Section 939(d) of the Dodd-Frank Act. In addition, the OCC published guidance to assist national banks and federal savings associations in their exercise of due diligence to determine whether securities are “investment grade” when assessing credit risk for portfolio investments. Release. Final Rules. Final Guidance.
SEC Final Rules on Procedures for Reviewing Clearing Submissions
On June 28, in accordance with Section 763(a) of the Dodd-Frank Act, the SEC adopted final rules regarding submissions of security-based swaps for clearing with registered clearing agencies. The SEC also adopted rules to define and describe when notices of proposed changes to rules, procedures or operations are required to be filed by designated financial market utilities in accordance with Section 806(e) of Title VIII of the Dodd-Frank Act. Most of the rules will become effective 60 days after publication in the Federal Register. Release. Final Rules.
FSB Approves Global LEI System
On May 30, the Financial Stability Board (FSB) approved the establishment of a global legal entity identifier (LEI) system that will provide a unique global identifier for parties to financial transactions. The LEI system was developed as part of the mandate of the Dodd-Frank Act directing the Treasury to collect financial transaction data from financial companies. The FSB projects a launch of the global LEI system by March 2013. FSB Release.
Fed Final Market Risk Capital Rule
On June 7, pursuant to Section 939A of the Dodd-Frank Act, the Fed released a final rule revising its market risk capital requirements to incorporate certain changes the Basel Committee on Banking Supervision made to its international capital standards for market risk between 2005 and 2010. The final rule is to be issued jointly with the FDIC and OCC, which are expected to adopt the rule next week. The final rule will be effective on January 1, 2013. Fed Memo. Fed Final Rule.
Agencies Memorandum of Understanding on Supervisory Coordination
On June 4, pursuant to Section 1025 of the Dodd-Frank Act, the Fed, the CFPB, the FDIC, the NCUA and the OCC released a memorandum of understanding clarifying how the agencies will coordinate their supervision of insured depository institutions with over $10 billion in assets and their affiliates. Joint Release. Memorandum of Understanding.
FSOC Rule on Oversight of Nonbank Financial Companies
On April 3, the FSOC approved a final rule and interpretive guidance on its authority to require supervision and regulation of certain nonbank financial companies. Section 113 of the Dodd-Frank Act authorizes the FSOC to require a company to be subject to Fed supervision if the FSOC determines that material financial distress at the company, or the characteristics of the company, could pose a threat to U.S. financial stability. Treasury Release. Final Rule.
Effective Date of Swaps Pushout Provision
On March 30, the FDIC, Fed, and OCC issued guidance clarifying that the effective date of Section 716 of the Dodd-Frank Act (known as the Swaps Pushout provision) is July 16, 2013. Section 716 prohibits the provision of Federal assistance to any entity defined under that section to be a swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity. Joint Release. Guidance.
The JOBS Act
On March 27, the U.S. House of Representatives approved the Jumpstart Our Business Startups Act (the JOBS Act). The Act had already passed the Senate and the President is expected to sign the Act shortly. The Act lifts the ban on “general solicitation and general advertising” for Rule 144A and certain Reg. D offerings, expands the Reg. A safe harbor limit from $5 million to $50 million and, in certain cases, raises the cap from 500 to 2,000 of the number of shareholders a company may have before it must register. The Act will also permit companies to raise up to $1 million in small amounts within any 12-month period without registering (“crowdfunding“). Finally, the Act creates the concept of an “emerging growth company” – generally companies with annual gross revenue of less than $1 billion – and relieves these companies from certain provisions of the Dodd-Frank Act and Sarbanes-Oxley Act. Most of the Act’s provisions, including the changes to Rule 144A and Reg. D, will become effective upon the effectiveness of rules to be adopted by the SEC. Full text of the Act could be found here.