Title VII

CFTC Final Order on the Effective Date for Swap Regulation

On July 3, the OCC issued a final Order on the effective date for swap regulation. The OCC previously extended the temporary exemptive relief from the Commodity Exchange Act that otherwise would have taken effect on July 16, 2011, the general effective date of Title VII of the Dodd-Frank Act. The final Order extends the previous extension with certain modifications, including: (i) removing references to entities terms such as “swap dealer”, “major swap participant”, and “eligible contract participant”, (ii) extending the potential latest expiration of the Order to December 31 or, depending on the nature of the relief, such other date as determined by the Commission, (iii) allowing the clearing of agricultural swaps; and (iv) removing references to the exempt commercial market and board of trade grandfather relief. The Order is effective immediately. CFTC Release.

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.

SEC Guidance, Relief, and Exemptions for Security-Based Swaps

On July 1, the SEC clarified which securities laws will apply to security-based swaps starting July 16, the effective date of Title VII of the Dodd-Frank Act. The SEC approved an order granting temporary relief and interpretive guidance clarifying that a substantial number of the Exchange Act requirements applicable to securities will not apply to security-based swaps when the revised definition of “security” goes into effect on July 16. Comments on the order must be submitted by July 15. The SEC also approved an interim final rule giving exemptions from the Securities Act, Trust Indenture Act, and other federal securities laws to allow certain security-based swaps to continue to trade and be cleared as they have before the enactment of the Dodd-Frank Act. Comments on the interim final rule must be submitted 45 days after it is posted on the website. SEC Release. Exemptive Order. Interim Final Rule.

SEC Proposal for Security-Based Swap Dealer and Participant Standards

On June 29, pursuant to Title VII of the Dodd-Frank Act, the SEC proposed rules to impose business conduct standards on security-based swap dealers and major swap participants. The proposed rule would: (i) require these swap dealers and participants to communicate in a fair and balanced manner and make certain disclosures; and (ii) impose additional requirements for dealings with special entities such as municipalities, pension plans, and endowments. Comments must be submitted by August 29. SEC Release. Proposed Rule.

CFTC Extension of Effective Date of Title VII of the Dodd-Frank Act

On June 14, the CFTC extended the general effective date of Title VII of the Dodd-Frank Act beyond July 16. For provisions of Title VII that reference the terms “swap“, “swap dealer“, “major swap participant“, or “eligible contract participant“, which the Dodd-Frank Act requires the CFTC to further define, persons or entities will be exempt from compliance with such provisions until the earlier of: (i) the effective date of definitional rulemaking for such terms; or (ii) December 31. For those provisions that will apply to certain transactions in exempt or excluded commodities as a result of the repeal of various exemptions and exclusions under the CEA as of July 16, the CFTC will temporarily exempt such transactions until the earlier of: (i) the repeal or replacement of applicable CFTC regulations; or (ii) December 31. CFTC Webcast of Open Meeting. CFTC Fact Sheet.

SEC Steps to Address Effective Date of Title VII of Dodd-Frank

On June 10, the SEC announced that it will take certain steps to clarify requirements applicable to security-based swap transactions as of July 16, which is the effective date of Title VII of the Dodd-Frank Act (which authorizes the SEC to regulate security-based swaps). These actions include providing temporary relief from certain provisions of Title VII, as well as from various pre-Dodd-Frank provisions of the Exchange Act. SEC Release.

Derivatives Month in Review – Dodd-Frank Implementation Update

The current issue of Derivatives Month in Review is devoted exclusively to the progress of the implementation of Title VII of the Dodd-Frank Act. In particular, the issue focuses on certain concerns being expressed in the market over rules proposed by regulators in connection with the implementation of the Dodd-Frank Act. Click here to read more.

SEC Proposed Rule for Security-Based Swap Acknowledgments

On January 14, the SEC proposed Rule 15Fi-1 under the Exchange Act which would require security-based swap dealers and major participants to provide to their counterparties trade acknowledgments with information about a transaction. The rule is being proposed under Title VII of the Dodd-Frank Act. Comments must be submitted within 30 days after publication in the Federal Register. SEC Rule.