On August 1, 2016, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Farm Credit Administration announced a final rule that contains certain exemptions for “certain commercial and financial end users from margin requirements for certain swaps not cleared through a clearinghouse.” The rule implemented without any changes the interim final rule from November 2015. Press Release. Press Release. Press Release. Press Release.
Swaps
SEC Adopts Trade Acknowledgment and Verification Rules for Security-Based Swap Transactions
On June 8, 2016, the Securities and Exchange Commission publicized the implementation of “rules that will establish timely and accurate trade acknowledgment and verification requirements for security-based swap (SBS) entities that enter into SBS transactions.” Press release.
SEC Adopts Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
On April 15, 2016, the Securities and Exchange Commission adopted final rules modifying regulations “for security-based swap dealers and major security-based swap participants (security-based swap entities).” The final rules address conduct and compliance officer issues. Release.
CFTC Approves Guidance Relating to Appropriate Treatment of Electric Power and Natural Gas Contracts
On April 4, 2016, the U.S. Commodity Futures Trading Commission (the “CFTC”) approved guidance relating to the appropriate treatment of certain electric power and natural gas contracts. The guidance provides that certain capacity contracts in electric power markets and certain natural gas contracts should not be considered “swaps” under the Commodity Exchange Act. Release.
OCC Proposes Rule on Margin and Capital Requirements for Covered Swap Entities
October 6, the OCC released a notice of proposed rulemaking to establish minimum requirements for the exchange of initial and variation margin between registered swap dealers, major swap participants, security-based swap dealers and major security-based swap participants (covered swap entities) and their counterparties to non-cleared swaps and non-cleared security-based swaps. Comments should be received on or before November 24. Press Release. NPR.
CFTC Swap Regulations
On August 13, the CFTC issued a final rule to exempt swaps entered into by qualified cooperatives from certain clearing requirements. The rule will be effective 30 days after publication in the Federal Register; however, the CFTC granted no-action relief to cover the interim period. CFTC Release. CFTC Final Rule. CFTC No-Action Letter.
Rating Agency Developments
On November 8, Fitch updated its criteria for ABCP. Fitch Report.
On November 7, Moody’s updated its approach for incorporating GIC provider ratings in U.S. state revolving fund and pool programs. Moody’s Report.
On November 7, Moody’s updated its approach to incorporating GIC and swap provider ratings in HFA programs. Moody’s Report.
On November 7, S&P released its European CMBS methodology and assumptions. S&P Report.
On November 5, DBRS released its preferred share and hybrid criteria for corporate issuers (excluding financial institutions). DBRS Report.
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CFTC Time Extension for Pre-Trade Screening Requirements
On September 26, the CFTC announced an extension of time for compliance for market participants to coordinate on the communication of limits for give-ups and bunched orders for futures and swaps. The extension is intended to provide sufficient time to transition to fully compliant pre-trade screening no later than June 1, 2013. CFTC Release.
CFTC Proposed Clearing Exemption for Swaps Between Affiliates
On August 16, the CFTC proposed an exemption from clearing requirements under Section 723 of the Dodd-Frank Act for swaps between certain affiliated entities within a corporate group. The proposed exemption would be limited to swaps between majority-owned affiliates and would require centralized risk management, swap trading relationship documentation, variation margin payments, and satisfaction of certain reporting requirements. Comments on the proposed rule must be submitted within 30 days of publication in the Federal Register. CFTC Release. CFTC Proposed Rule.
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.