swap dealer

Board of the Federal Reserve Announces Final Rule Amending Regulation EE

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On February 18, the Board of the Federal Reserve announced a final rule amending Regulation EE, which is intended to reduce risk and increase efficiency in the financial system. The final rule applies netting protections to a broader range of financial institutions. The expanded definition of financial institutions now includes swap dealers and security-based swap dealers, nonbank systemically important financial institutions, foreign banks and qualifying central counterparties, among other new additions. The final rule also made minor clarifications to the existing activities-based test in Regulation EE, which clarify the application of the test following a consolidation of legal entities. Release.

CFTC Approves NFA’s Swap Dealer Capital Model Review Program

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On January 13, the Commodity Futures Trading Commission’s (CFTC) Market Participation Division determined that the National Futures Association’s (NFA) swap dealer capital model requirements and review program is comparable to the CFTC’s swap dealer capital model requirements and review program and is an acceptable means of compliance with CFTC Regulation 23.102. Release.

CFTC’s Division of Swap Dealer and Intermediary Oversight Issues Time-Limited No-Action Transition for March 1, 2017 Compliance Date for Variation Margin and No-Action Relief From Minimum Transfer Amount Provisions

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On February 13, 2017, the U.S. Commodity Futures Trading Commission (the “CFTC“) announced that, between March 1, 2017 and September 1, 2017, it would “not recommend an enforcement action against a swap dealer (SD) for failure to comply with the variation margin requirements for swaps that are subject to a March 1, 2017 compliance date.” Importantly, the CFTC is not delaying the compliance date, but rather providing a “grace period” for compliance.

In the same release, the CFTC announced it would “not recommend an enforcement action against an SD, subject to certain conditions, that does not comply with the minimum transfer amount (MTA) requirements of” two CFTC regulations. Release.

Commission Approves an Order Regarding Swap Dealer Registration De Minimis Exception

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On October 13, 2016, the U.S. Commodity Futures Trading Commission extended until December 31, 2018, the $8 billion swap dealer registration de minimis threshold. Unless it is further modified, the threshold will become $3 billion once the extension expires. Press Release.

CFTC Issues No-Action Letter to Swap Dealers to Extend Collateral Rule Deadline due to Limitations with Custodial Accounts

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On September 1, 2016, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Swap Dealer and Intermediary Oversight announced that it “issued a time-limited, no-action letter stating that it will not recommend an enforcement action against a swap dealer subject to the September 1, 2016 compliance date for the CFTC’s uncleared swap margin rules, subject to certain conditions, for failing to fully comply with the custodial arrangement requirements of CFTC regulation 23.157 prior to October 3, 2016.” Press release.

OCC Guidance on Transition Periods under Section 716 of the Dodd-Frank Act

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On January 3, the OCC issued guidance regarding requests for a transition period pursuant to Section 716(f) of the Dodd-Frank Act.  A federal depository institution that is or may become a swap dealer may submit a request for a transition period, provided that such request conforms to the procedures and conditions established in the guidance.  Written requests for transition periods must be submitted by January 31.  OCC Release.  OCC Guidance.

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

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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.