On January 11, pursuant to Section 731 of the Dodd-Frank Act, the CFTC adopted final regulations which, among other things: (i) establish a registration process for swap dealers and major swap participants; (ii) require swap dealers and major swap participants to be members of a registered futures association; and (iii) subject “Push-Out Affiliates” to the same requirements. CFTC Release. CFTC Final Rule.
Swaps
CFTC Final Rules on Swap Data Recordkeeping and Reporting Requirements
On December 20, pursuant to Sections 727, 728, and 729 of the Dodd-Frank Act, the CFTC adopted final rules establishing swap data recordkeeping and reporting requirements for swap data repositories, derivatives clearing organizations, designated contract markets, swap execution facilities, swap dealers, major swap participants, and swap counterparties that are neither swap dealers nor major swap participants. The final rules will be effective 60 days after issuance. CFTC Fact Sheet. CFTC Final Rules.
CFTC Final Rules on Real-Time Reporting of Swap Transaction Data
On December 20, pursuant to Section 727 of the Dodd-Frank Act, the CFTC adopted final rules to implement a new framework for the real-time public reporting of swap transaction and pricing data for all swap transactions. The final rules will be effective 60 days after publication in the Federal Register. CFTC Fact Sheet. CFTC Final Rules.
CFTC Final Order on Effective Date for Swap Regulation
On December 19, the CFTC issued a Final Order on swap regulation extending the potential latest expiration date of exemptive relief from certain provisions of the Commodity Exchange Act to July 16. CFTC Release.
Michael Barnier Reassures the City Over Euro Zone Integration
Michael Barnier, the European commissioner overseeing financial services, has used the opportunity of speaking before an audience in London on 4 November 2011 to highlight the commission’s view on the key areas of progress in the development of European Financial Regulation and to address growing concerns that increased integration within the euro-zone will isolate or penalise EU member states who are not subscribed to the single currency.
The key areas of regulatory development referred to in the speech included:
- The proposed increase in capital and liquidity requirements in compliance with Basel III;
- The measures designed to increase transparency within hedge funds;
- The new rules regarding short selling and credit default swaps;
- The increased transparency of over the counter derivatives;
- The revision of the Markets in Financial Instruments Directive (MiFID 2) which will regulate technological developments such as high frequency trading; and
- New proposals on how to target Market Abuse.
European Commission: Press release (SPEECH/11/721) (4 November 2011).
IRS Issues Proposed Regulations Addressing Treatment of Credit Default Swaps and Swap Exclusion Under Section 1256
On September 15, 2011 the Treasury Department issued proposed regulations that would add credit default swaps as well as non-financial indexed derivatives to a revised definition of a notional principal contract. Click here to read more.
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.
Dexia SA Cites Deutsche Bank’s Internal MBS Descriptions In Suit Over $1 Billion in RMBS Purchases
On July 13, 2011, Dexia SA filed a lawsuit in New York State Supreme Court against Deutsche Bank AG and several of its affiliates in connection with its purchase of more than $1 billion in RMBS between 2005 and 2007 from the Deutsche Bank defendants. Dexia asserts state law claims for fraud, fraudulent inducement, aiding and abetting fraud and negligent misrepresentation. The complaint alleges that the defendants made false or misleading statements to prospective investors touting the quality of the RMBS, the underlying loans and the defendants’ due diligence process while, at the same time, defendants’ internal documents disparaged the RMBS and the defendants took positions in CDOs and credit default swaps that were effectively betting against the performance of similar RMBS. Dexia Complaint vs. Deutsche Bank.
CFTC Clarification Order on Effective Date for Swaps Regulations
On July 14, the CFTC issued an order clarifying the effective date of the provisions in the swap regulatory regime established by Title VII of the Dodd-Frank Act. The order provides temporary exemptions from certain provisions of the Commodities Exchange Act and will become effective on July 16. The order will expire upon the earlier of the effective date of final rules specified in the order or December 31. CFTC Release.
CFTC and SEC Roundtable on Dodd-Frank Implementation
On April 12, the SEC and the CFTC announced that they will hold a joint public roundtable on May 2-3 to discuss the schedule for implementing final rules for swaps and security-based swaps under the Dodd-Frank Act. Public comments on the effective dates and phased implementation for compliance with final rules may be submitted through the CFTC website prior to the roundtable. CFTC Release.