Dodd-Frank Wall Street Reform and Consumer Protection Act: Understanding When and How the Act Will Impact You
Legal Alert: Nearly at the Buzzer, CFTC Affords End-Users Relief from Dodd-Frank Reporting Requirements
April 19, 2013
On the brink of the compliance date for arguably one of the most burdensome requirements that end-users face under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Commodity Futures Trading Commission’s (CFTC) Divisions of Market Oversight (DMO) and Clearing and Risk (DCR) issued no-action letters affording end-users (1) temporary relief from the general, historical and real-time swap data reporting requirements under Dodd-Frank; and (2) conditional relief from the reporting requirements applicable to (a) interaffiliate swaps and (b) trade options. Please note, however, that the no-action letters discussed herein do not afford end-users any relief from the recordkeeping requirements under Part 45. This Legal Alert provides a high-level summary of the relief afforded by each of these letters and the conditions that end-users must meet to qualify for the relief.
Legal Alert: ISDA Accepting Comments on Draft Dodd-Frank “Protocol 2.0”
February 5, 2013
Pursuant to Title VII of the Dodd-Frank Wall Street Reform and Customer Protection Act (Dodd-Frank), the Commodity Futures Trading Commission (CFTC) has adopted a number of final regulations that require swap dealers (SDs) and major swap participants (MSPs) to amend their existing swap trading relationship documentation. To facilitate compliance with these requirements, the International Swaps and Derivatives Association, Inc. (ISDA) initiated a market-wide ISDA Dodd-Frank documentation initiative. The first element of this initiative, the ISDA August 2012 DF Protocol (August Protocol), focused largely on CFTC regulations requiring SDs and MSPs to abide by business conduct standards with respect to their counterparties.
Legal Alert: The CPO and CTA Regulatory Regimes: What Operators of and Advisers to Commodity Pools Should Expect in 2013
January 17, 2013
There were a number of significant changes to the regulatory regime for commodity pool operators (CPOs) and commodity trading advisors (CTAs) in 2012. As a result of these changes, various types of collective investment vehicles that previously were not regulated by the CFTC, and their operators and advisers, became subject to CFTC oversight as of January 1, 2013. We anticipate additional significant developments for the CPO and CTA regulatory regimes in 2013, including as they apply to such persons. In particular, we expect there to be further developments with respect to the following areas, each of which is discussed in more detail below.
Legal Alert: Insurance Safe Harbor Affords Little Certainty for Non-US Insurers
January 3, 2013
As market participants are aware, the definition of “swap” that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) added to the Commodity Exchange Act is very broad and, arguably, includes agreements, contracts and transactions that traditionally have not been considered swaps. This is particularly the case with respect to insurance.
Legal Alert: CFTC Announces Beginning of Real-Time Reporting and Swap Dealer Registration Requirements and Releases List of Provisionally Registered Swap Dealers
January 2, 2013
Today, Wednesday, January 2, 2013, the Commodity Futures Trading Commission (CFTC) announced that final rules pertaining to: (1) real-time reporting of swap transaction data; and (2) swap dealer registration requirements, became effective on December 31, 2012. The CFTC also released a list of 65 entities that, as of Monday, December 31, 2012, are provisionally registered as swap dealers and required to comply with the real-time reporting requirements for swap transactions. This list includes the largest domestic and international financial institutions dealing in the swaps market that were required to register as swap dealers, as of October 31, 2012, because they each exceeded the de minimis threshold for swap dealing activity.
Legal Alert: CFTC Extends Compliance Dates for Dodd-Frank Requirements Necessitating Amendments to Existing Trade Documentation
December 21, 2012
On December 18, the Commodity Futures Trading Commission (CFTC), by private vote, adopted interim final rules (Interim Final Rules) to amend the compliance dates for previously issued final rules that establish external business conduct standards, trade documentation and portfolio reconciliation requirements for swap dealers (SDs) and major swap participants (MSPs). The Interim Final Rules do not change the substance of the aforementioned rules. Rather, they afford SDs and MSPs until May 1, 2013 to comply with the external business conduct standards rules and until July 1, 2013 to comply with the trade documentation and portfolio reconciliation requirements. Although the relief afforded by the Interim Final Rules is directly applicable to SDs and MSPs, other market participants, including end-users, also benefit from the extended compliance dates, for the reasons discussed below.
Legal Alert: CFTC Issues Relief from CPO Registration to Funds of Funds, BDCs and Family Offices; NFA Issues Guidance on the Annual Affirmation Requirement
December 7, 2012
On November 29 and December 4, the Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a series of no-action letters that afford relief from registration as a commodity pool operator (CPO) to operators of certain funds of funds (the Fund of Funds Letter), business development companies (the BDC Letter) and family offices (the Family Offices Letter) that engage in commodity interest (i.e., futures, options and swaps) trading. Also, on December 3, the National Futures Association (NFA) issued guidance that addresses the manner in which CPOs and commodity trading advisors (CTAs) that are exempt or excluded from registration can satisfy the new CFTC requirement to affirm eligibility for exemption or exclusion from registration. The CFTC no-action letters and NFA guidance are summarized below.
Legal Alert: CFTC Issues No-Action Relief from Commodity Pool Operator Registration Requirements for Business Development Companies
December 5, 2012
On December 4, 2012, the Commodity Futures Trading Commission’s (CFTC’s) Division of Swap Dealer and Intermediary Oversight (DSIO) issued no-action relief from commodity pool operator (CPO) registration requirements for advisers of business development companies (BDCs). Under the no-action relief, the DSIO will treat BDCs as investment companies registered under the Investment Company Act of 1940 (RICs) for purposes of the Regulation 4.5 exclusion from CPO registration requirements (the Rule 4.5 Exclusion). The Rule 4.5 Exclusion is an exclusion from the definition of CPO available to advisers of RICs that trade commodity interests subject to certain conditions, namely that the RICs meet certain de minimis commodity interest trading thresholds. The no-action relief afforded by the DSIO is not self-executing; rather, BDCs must submit a claim for relief to the DSIO. This Legal Alert describes the DSIO’s no-action letter and the relief it affords to BDCs.
Legal Alert: CFTC Issues First Set of Mandatory Clearing Determinations and Time-Limited No-Action Relief
November 30, 2012
On November 28, the Commodity Futures Trading Commission (CFTC) issued final clearing determinations (Final Determinations) with respect to four classes of interest rate swaps (IRS) and two classes of credit default swaps (CDS). The CFTC was scheduled to adopt the Final Determinations at an open meeting to be held yesterday, but the meeting was canceled and the Final Determinations were issued by seriatim on November 28 instead.
Legal Alert: U.S. Treasury Secretary Exempts FX Swaps and FX Forwards From Key Dodd-Frank Requirements
November 19, 2012
On Friday, November 16, 2012, U.S. Treasury Secretary Timothy Geithner issued the final determination to exempt foreign exchange (FX) swaps and FX forwards from regulation as “swaps.” As a result, such instruments are exempt from several key Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requirements for over-the-counter (OTC) derivatives, including mandatory clearing, electronic trade execution and margin requirements.
News: Platts Energy Week, David T. McIndoe
October 7, 2012
Legal Alert: Federal Courts Bars Extraterritorial Application of Dodd-Frank’s Anti-Retaliation Provision to Whistleblowers Employed Abroad
October 23, 2012
In Asadi v. G.E. Energy (USA), LLC, a federal district court in Texas held that Dodd-Frank’s anti-retaliation protections for SEC whistleblowers do not apply to employees stationed abroad. Although the Asadi holding may not bind other courts, it represents an important step toward defining the scope of Dodd-Frank’s broad remedies for whistleblowers.
Legal Alert: CFTC Affords Relief and Guidance in Light of Final Swap Definition’s Effective Date
October 19, 2012
On October 12, 2012, the Commodity Futures Trading Commission’s (CFTC) and Securities and Exchange Commission’s (SEC) final rules to further define the term “swap” (among other terms) became effective. The effective date of the final rules triggered the compliance dates for a large number of CFTC requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Recognizing that many market participants are facing uncertainty in how the new rules apply and are currently unable to comply with the new requirements, pending finalized rules, relief or guidance from the CFTC, the CFTC issued a series of no-action relief letters and other guidance late last week. This Legal Alert describes the relief and guidance that the CFTC has issued to date. Additional guidance is expected to be issued in the coming weeks.
Legal Alert: Prudential Regulators Re-Open Comment Period for Proposed Capital and Margin Requirements
October 8, 2012
On September 26, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration and the Federal Housing Finance Agency, re-opened the public comment period for Proposed Rules that were issued last year that, when adopted, will establish capital and uncleared swaps margin collection requirements for swap dealers and major swap participants. Comments in response to the Proposed Rules are due on November 26. Market participants who are concerned about the amount of the initial and variation margin they would be required to collect or post, as well as the type of collateral that could be used to satisfy these requirements, should take this opportunity to comment, or reinforce their prior comments, on the Proposed Rules.
Legal Alert: CFTC’s Position Limits Rule Vacated
September 28, 2012
Earlier today, the U.S. District Court for the District of Columbia issued a memorandum opinion and order that vacates and remands the Commodity Futures Trading Commission’s (CFTC) final rules that would have established position limits for certain physical commodity futures and for derivatives that are economically equivalent to those futures (Position Limits Rules). The Position Limits Rules were adopted last year in a 3-2 vote and were promulgated pursuant to authority granted to the CFTC by the Dodd-Frank Wall Street Reform Consumer and Protection Act (Dodd-Frank Act). The CFTC’s vote to adopt the Position Limits Rule was split among party lines. Under the Position Limits Rules, position limits would have been established in two phases; market participants would have had to comply with the first phase of limits beginning on October 12, 2012.
Legal Alert: SEC Expands Disclosure Requirements for Energy Exploration Companies (Oil, Gas and Minerals)
August 30, 2012
The U.S. Securities and Exchange Commission (SEC) has adopted final rules requiring oil, gas and mineral exploration companies to make annual disclosures regarding certain payments made to the U.S. government and foreign governments. See final rules. Companies subject to the new requirement to publicly disclose project-specific expenses will likely want to implement new internal procedures, or enhance existing procedures, to ensure that sufficient information regarding such payments is both gathered and retained going forward. Indeed, while the new requirements could potentially increase compliance costs for these companies, termed “resource extraction issuers,” because they direct the companies to formally record and disclose a wide range of government payments, proper planning and implementation of internal procedures in response to the new disclosure requirements could potentially help mitigate those additional costs.
The rules – pertaining to Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act) – will require companies to file the disclosure with the SEC for fiscal years ending after September 30, 2013.
Legal Alert: CFTC Responds to Questions Regarding CPO and CTA Registration and Compliance
August 16, 2012
On August 14, the Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight issued a response to frequently asked questions (FAQs) concerning registration and compliance by commodity pool operators (CPOs) and commodity trading advisors (CTAs). The FAQs focus on questions raised by market participants as a result of recent amendments to CFTC rules including the narrowing of CFTC Rule 4.5, the exclusion from CPO status for operators of registered investment companies that invest in commodity interests, the repeal of CFTC Rule 4.13(a)(4), which is the so-called "sophisticated investor" exemption from CPO registration, and correlative impacts on CTA registration. In particular, the FAQs provide guidance on key areas such as timing for claiming an alternate exemption and transitioning, registering with the CFTC, when guidance on Forms CPO-PQR and CTA-PR will be available (potentially after large entities' initial filing), complying with certain CFTC requirements and whether certain relief, such as Commission Advisory 18-96, remains available (it does).
Legal Alert: Publication of ��Swap” Definition Triggers Dodd-Frank Derivatives Reform Compliance Dates
August 13, 2012
The joint final rules adopted last month by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to further define the terms “swap” and “security-based swap” were published in the Federal Register today. The joint final rules, which were adopted by the CFTC on July 10, will become effective on October 12, 2012. These rules are a key component of the new regulatory regime imposed on the over-the-counter derivatives market by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
Legal Alert: Operators of, and Advisers to, New Private Funds Have Until December 31 2012, to Register with the CFTC
August 2, 2012
On July 13, the Commodity Futures Trading Commission (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter to grant relief to operators of, and advisers to, hedge funds and other private funds that invest in commodity futures, options and/or swaps (i.e., commodity interests). These operators and advisers will now have until December 31, 2012, to register with the CFTC as commodity pool operators (CPOs) and commodity trading advisors (CTAs), respectively, absent eligibility for an exclusion or exemption therefrom.
Legal Alert: CFTC Issues Pre-Publication Copy of Final Product Definitions
July 13, 2012
Earlier today the Commodity Futures Trading Commission (CFTC) published a pre-publication version of the joint CFTC and Securities and Exchange Commission final rules to further define, among other things, the terms "swap" and "security-based swap" (the Final Rules). As noted in a Legal Alert that was circulated earlier this week following their adoption, the Final Rules serve to clarify the scope of the "swap" and "security-based swap" definitions with respect to, among other things, insurance, consumer and commercial transactions, and foreign exchange (FX) swaps and forwards. The Final Rules also provide guidance with respect to the forward exclusion from the swap definition for nonfinancial commodities and clarify the relationship between swaps and security-based swaps.
Legal Alert: CFTC Finalizes the End-User Exception from Mandatory Clearing and Proposes to Extend It to Certain Cooperatives
July 11, 2012
Yesterday, the Commodity Futures Trading Commission (CFTC) approved a final rule to implement the end-user exception from mandatory clearing (the Final Rule) and a proposed rule to extend the scope of the end-user exception to certain cooperatives (the Proposed Rule).
Legal Alert: CFTC Adopts Second Amended July 14 Exemptive Relief Order Pertaining to the Effective Date for Swap Regulation
July 6, 2012
On July 3, the Commodity Futures Trading Commission (CFTC) issued a final order to amend, for a second time, a temporary exemptive relief order that the CFTC issued on July 14, 2011, pertaining to the effective date for swap regulation (the July 14 Order). The second amended order preserves the status quo for swaps until the new Dodd-Frank Act regulatory regime takes effect.
Legal Alert: CFTC Proposes Guidance on the Extraterritorial Application of the Dodd-Frank Act's Swaps Requirements
July 2, 2012
On June 29, the Commodity Futures Trading Commission (CFTC) issued highly anticipated proposed interpretive guidance and a policy statement concerning the extraterritorial application of certain swaps provisions of the Commodity Exchange Act (CEA) that were added by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and CFTC rules issued or to be issued thereunder. The CFTC is soliciting comments in response to questions posed in the proposed interpretive guidance and policy statement. Comments must be submitted within 45 days of the publication of the proposed guidance and policy statement in the Federal Register, which is expected to occur shortly.
Legal Alert: NFA Guidance on Transitioning From an Exemption From CPO Registration Under CFTC Rule 4.13(a)(4) to Registration or an Alternative Exemption
June 29, 2012
On June 27, the National Futures Association (NFA) issued Notice I-12-12 "Guidance to Persons Operating or Advising Funds Pursuant to an Exemption under CFTC Regulation 4.13(a)(4)" (the NFA Guidance). The NFA Guidance was provided in connection with final rules, adopted by the Commodity Futures Trading Commission (CFTC) on February 9 (Final Rules), that amend CFTC regulations governing the registration of commodity pool operators (CPOs). Among other things, the Final Rules rescinded CFTC Regulation 4.13(a)(4), the so-called "sophisticated investor" exemption, which afforded an exemption from CPO registration to operators of certain private funds. Regulation 4.13(a)(4)'s rescission took effect on April 24, 2012. However, advisers to funds that claimed the CFTC Regulation 4.13(a)(4) exemption prior to April 24, 2012, are not required to register as CPOs or claim an alternative exemption until January 1, 2013.
Legal Alert: SEC Proposes Compliance Schedule for Final Dodd-Frank Rules
June 26, 2012
On June 14, 2012, the Securities and Exchange Commission (SEC) published a proposed policy statement (the Policy Statement) in the Federal Register pertaining to the order in which its final rules to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) should take effect. The primary responsibility of the SEC under Title VII relates to “security-based swaps,” though the SEC will, in many instances, share responsibilities with the Commodity Futures Trading Commission (CFTC). Specifically, although the Dodd-Frank Act granted the CFTC primary jurisdiction over swaps and the SEC primary jurisdiction over security-based swaps, both agencies are charged with adopting joint rules to further define, among other things, the terms “swap” and “security-based swap.” Such rules were proposed last year, but final rules have yet to be adopted. As a result, to the extent the SEC’s proposed timetable for finalizing its rules (including these definitions) differs from that of the CFTC, the effective date of other CFTC rules, as well as the definitions, will be impacted.
Legal Alert: The CFTC's Final Entity Rules and Their Implications for Hedge Funds and Other Private Funds
May 10, 2012
Last month, the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC) adopted highly anticipated final rules to, among other things, further define the terms "swap dealer" and "major swap participant" (Final Entity Rules). The Final Entity Rules are significant because persons that meet the swap dealer or major swap participant definitions will be required to register with the CFTC and comply with a myriad of substantive regulatory requirements including, among others, internal and external business conduct standards and capital, margin, recordkeeping and reporting requirements. The Final Entity Rules are considered a key component of the new regulatory regime that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) imposes on over-the-counter derivatives.
Legal Alert: CFTC Adopts Final Rule to Treat Commodity Options as Swaps; Provides Exemption for Physical Options
May 3, 2012
On April 18, 2012, the Commodity Futures Trading Commission (CFTC or the Commission) adopted a final rule that will generally regulate commodity options as swaps (the Final Rule) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). As part of the Final Rule, the CFTC adopted an interim final rule that, subject to certain conditions, will exempt physically settled commodity options (Physical Options) from several key Dodd-Frank Act requirements.
Legal Alert: CFTC and SEC Define "Swap Dealer" and "Major Swap Participant"
April 19, 2012
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) adopted highly anticipated final rules yesterday to further define the terms "swap dealer," "security-based swap dealer," "major swap participant," "major security-based swap participant" and "eligible contract participant" (Final Entity Rules). The Final Entity Rules are significant because entities that meet one of the aforementioned dealer or major participant definitions will be required to register with the CFTC or SEC and comply with a myriad of substantive regulatory requirements. The Final Entity Rules are considered a key component of the new regulatory regime that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) imposes on over-the-counter derivatives. In addition, the CFTC adopted a final rule that will subject commodity options, other than those that are physically settled, to the same regulatory regime as other types of swaps (Commodity Options Rule).
Legal Alert: FSOC Finalizes Rule for Designation of Insurance Company and Other Nonbank "Systemically Important Financial Institutions"
April 17, 2012
On April 3, 2012, the Financial Stability Oversight Council (FSOC) approved by unanimous vote a final rule for designating nonbank financial companies as systemically important financial institutions. An FSOC determination of systemic importance will subject a nonbank financial company to the prudential standards of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act or Act) and to the supervision of the Board of Governors of the Federal Reserve System (Board of Governors). The final rule follows a second notice of proposed rulemaking on October 11, 2011 (Second Notice) and a first notice of proposed rulemaking on January 26, 2011.
Legal Alert: Customer Clearing Documentation, Timing for Acceptance of Clearing, and Clearing Member Risk Management
April 2, 2012
On Tuesday, March 20, 2012, the U.S. Commodity Futures Trading Commission (CFTC) approved a final rule (the "Final Rule") regarding customer clearing documentation, timing of acceptance of swaps for clearing, and clearing member risk management. Late last week, the CFTC published the Final Rule on its website, but the Final Rule has not yet appeared in the Federal Register. CFTC staff has also posted additional information about the Final Rule in a Fact Sheet and Q&A on its website.
Legal Alert: CFTC Issues Rules to Increase Oversight of Funds That Invest in Commodity Interests
February 29, 2012
On February 9, the Commodity Futures Trading Commission (CFTC) adopted amendments to its regulations governing the registration of commodity pool operators (CPOs) and the compliance obligations of CPOs and commodity trading advisors. As a result, advisers to registered investment companies, among others, will now be required to (1) register with the CFTC as CPOs and (2) comply with the myriad of CFTC regulations applicable to CPOs. The majority of the amendments will become effective on April 24, 2012.
Also on February 9, the CFTC proposed to harmonize certain CFTC regulations with Securities and Exchange Commission regulations. The public comment period for the proposal will be open until April 24, 2012.
Legal Alert: Regulatory Watch List for 2012: Issues Anticipated to Impact the Commodity ETF Industry
February 10, 2012
Exchange-traded funds (ETFs) investing in commodities and their advisers, that are registered or required to be registered with the Commodity Futures Trading Commission (CFTC) as commodity pool operators (CPOs) or commodity trading advisors (CTAs), are accustomed to navigating a broad range of complex laws and regulations. Due, in large part, to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and increased scrutiny by regulators of the financial and commodities markets, 2012 promises to bring a host of new regulatory requirements and issues for CPOs and CTAs. Below are five areas that members of the commodity ETF industry will want to watch in 2012.
Legal Alert: Regulatory Watch List for 2012: The Shifting Landscape for Hedge Funds and Other Private Funds
February 8, 2012
The Dodd-Frank Wall Street Reform and Consumer Protection Act was adopted in July 2010 with the goals of reducing risk, increasing transparency and promoting market integrity within the financial system. The Act and related regulations will significantly alter the space within which hedge funds and other private funds currently operate and, as a result, such funds should begin preparing to comply with the new requirements now.
Legal Alert: CFTC Holds First Open Meeting of 2012 and Finalizes Key Rulemakings Under the Dodd-Frank Act
January 13, 2012
On January 11, the Commodity Futures Trading Commission (CFTC) adopted three final rules to implement certain requirements contained in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), including (1) the protection of cleared swaps customer collateral, (2) external business conduct standards for swap dealers and major swap participants, and (3) the registration of swap dealers and major swap participants. The CFTC also adopted proposed rules to implement the Volcker Rule.
Legal Alert: CFTC Extends Effective Date for Swap Regulation and Finalizes Certain Swap Data Recordkeeping and Reporting Requirements
December 22, 2011
On December 19 the Commodity Futures Trading Commission (CFTC) approved, by seriatim, amendments to a July 14, 2011 temporary exemptive relief order (the July 14 Order) pertaining to the effective date for swap regulation under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The amendments to the July 14 Order were proposed in October and were subject to a 30-day public comment period. CFTC staff also revised a no-action relief letter pertaining to certain self-effectuating provisions of the Dodd-Frank Act that are not addressed by the July 14 Order or the amendments thereto.
Legal Alert: CFTC Attempts to Strike Balance Between Protection of Customer Funds and Flexibility for FCMs and DCOs Investing Customer Funds
December 13, 2011
At an open meeting on December 5, 2011, the Commodity Futures Trading Commission (the CFTC) approved a final rule (the Final Rule) to amend existing CFTC Reg. § 1.25 regarding the investment of customer funds held as margin for futures and cleared swaps by derivatives clearing organizations (DCOs) and futures commission merchants (FCMs).
Legal Alert: ISDA and SIFMA Attack Position Limits in First Challenge to CFTC Rulemaking Under the Dodd-Frank Act
December 7, 2011
At its open meeting on Tuesday October 19, 2011 the Commodity Futures Trading Commission (the CFTC) approved final rules (the Final Position Limits Rules) establishing position limits for 28 enumerated futures contracts, options on such contracts and economically equivalent swaps and swaptions (so-called Referenced Contracts) under Section 4a(a) of the Commodity Exchange Act (the CEA), as amended by Section 737 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The Final Position Limits Rules were published in the Federal Register on November 18, 2011.
Legal Alert: MF Global Update: MF Global Proceedings Test Multiple Insolvency Statutes
November 15, 2011
On October 31, the MF Global enterprise collapsed into bankruptcy and a number of related insolvency proceedings. Amid allegations of improper commingling of customer accounts and rumors of misbegotten proprietary Eurobond trades, two unregulated entities – MF Global Finance USA Inc. and MF Global Holdings Ltd. (the Unregulated Debtors) – filed voluntary bankruptcy petitions on October 31, 2011. Later the same day, the Securities Investor Protection Corporation filed a complaint in the U.S. District Court for the Southern District of New York, seeking appointment of a trustee to commence liquidation of MF Global Inc. (MFGI) under the Securities Investor Protection Act (SIPA). By the end of the week, regulated brokerages were also in administration under local insolvency regimes in the United Kingdom, Australia, Singapore, India, Hong Kong and Canada.
Legal Alert: CFTC Proposes to Extend July 14 Temporary Exemptive Relief Order
October 28, 2011
Last week the Commodity Futures Trading Commission ("CFTC") approved the issuance of a Proposed Amendment to a July 14, 2011, Temporary Exemptive Relief Order (the "July 14 Order") that grants market participants temporary exemptive relief from certain provisions of the Commodity Exchange Act ("CEA") that otherwise would have taken effect on July 16, 2011, the general effective date of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The Proposed Amendment would extend the latest expiration date of the July 14 Order from December 31, 2011, to July 16, 2012, and would add provisions to account for the repeal and replacement of Part 35 of the CFTC's regulations on December 31.
Legal Alert: FSOC Proposal Further Clarifies Which Nonbank Financial Companies Could Be Designated "Systemically Important Financial Institutions"
October 17, 2011
In response to criticism and pressure from financial industry participants and members of Congress, the Financial Stability Oversight Council (FSOC), on October 11, provided a more detailed proposal for designating nonbank financial firms as "systemically important financial institutions.
Legal Alert: CFTC Proposes Rules To Phase In Compliance with Dodd-Frank's New Derivatives Requirements and Releases Tentative Rulemaking Schedule
September 19, 2011
On September 8, 2011, the CFTC held an open meeting to consider two proposed rules under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The proposed rules address implementation schedules for compliance with the Dodd-Frank Act's (1) swap clearing and platform execution requirements; and (2) swap documentation and margining requirements for uncleared swaps. The CFTC also released a tentative outline for issuance of final versions of the majority of its rulemakings under Title VII of the Dodd-Frank Act.
Legal Alert: Regulators Consider Whether Stable Value Contracts Should Be Subject to Regulation as Swaps under the Dodd-Frank Act and Solicit Public Comment
August 30, 2011
In addition to requiring the Commodity Futures Trading Commission (the CFTC) and the Securities and Exchange Commission (the SEC) to promulgate rules further defining the terms "swap" and "security-based swap" under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), Title VII of the Dodd-Frank Act requires the CFTC and the SEC to conduct a study of whether stable value contracts (SVCs) fall within the term "swap." This study is to be completed by October 21, 2011, 15 months after the enactment of the Dodd-Frank Act. In furtherance of their study, the CFTC and the SEC have published a request for public comment on SVCs (the SVC Joint Release). Comments are due on September 26, 2011.
Legal Alert: Assignment of the Times: New Tax Rules Respond to Concerns Regarding Assignment of Derivative Contracts Required by Dodd-Frank
July 25, 2011 On July 21, 2011, the Internal Revenue Service and Treasury issued temporary regulations that modify Treas. Reg. § 1.1001-4 and generally provide that an assignment of a derivative contract by a dealer (or a clearinghouse) to a dealer or clearinghouse generally will not result in a taxable exchange to the non-assigning counterparty. The temporary regulations are significant because the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the transfer of certain derivative contracts. The modifications made by the temporary regulations, including a likely inadvertent change with respect to the treatment of commodity-based notional principal contracts, are discussed in the attached Legal Alert.
- Will require advisers to hedge funds and other private funds to register with the SEC;
- Establish new exemptions from SEC registration and reporting requirements for certain advisers that are exempt from registration ("exempt reporting advisers"); and
- Reallocate regulatory responsibility for advisers between the SEC and the states.
Legal Alert: CFTC Issues Final Order to Provide Temporary Relief from Provisions of the Dodd-Frank Act Slated to Become Effective on July 16, 2011 and Releases Agenda for Upcoming Meetings
July 15, 2011
On July 14, 2011, the Commodity Futures Trading Commission (CFTC) finalized its order providing temporary exemptive relief from certain provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that would otherwise take effect tomorrow (July 16, 2011). According to the final order's preamble and a press release issued by the CFTC, the final order is essentially the same as the corresponding proposed order originally published by the CFTC on June 17, 2011.
Legal Alert: SEC Proposes Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
June 30, 2011
Yesterday the Securities and Exchange Commission (SEC) proposed rules to establish business conduct standards for security-based swap dealers and major security-based swap participants (Proposed Rules), as mandated by Section 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). SEC Chairman Mary Schapiro stated that the Proposed Rules "are intended to establish a framework that protects investors and also promotes efficiency, competition, and capital formation." According to Chairman Schapiro, the Proposed Rules would level the playing field in the security-based swaps market by requiring transparency and ensuring that security-based swap customers are treated fairly.
Legal Alert: CFPB: Important Comment Period on Nonbank Regulation
June 28, 2011
On June 23, the Bureau of Consumer Financial Protection (CFPB) invited preliminary comment on future rulemaking the Bureau will undertake under Section 1024 of the Consumer Financial Protection Act of 2010. Under Section 1024, the Bureau is required to construct a supervisory regime for residential mortgage, private education lending and payday lending firms, as well as the "larger participants" of other product and service markets that the Bureau defines in rulemaking.
Legal Alert: Prudential Regulators Extend Public Comment Deadline for Capital and Margin Proposed Rules
June 23, 2011
Earlier today the Board of Governors of the Federal Reserve System, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Office of the Comptroller of the Currency (collectively, the Prudential Regulators) announced the extension of the public comment deadline for proposed rules to establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap dealers (the Proposed Rules). Comments were originally due on June 24, 2011 but will now be due on July 11, 2011. The new public comment deadline for the Proposed Rules is coterminous with the public comment deadline for Commodity Futures Trading Commission (CFTC) proposed rules pertaining to capital and margin requirements.
Legal Alert: SEC Adopts Extensive Changes to Investment Adviser Regulatory Scheme as Mandated by the Dodd-Frank Act
June 23, 2011
At an open meeting yesterday, the U.S. Securities and Exchange Commission ("SEC" or "Commission") adopted new rules and rule amendments under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), which: (i) will require advisers to hedge funds and other private funds to register with the SEC; (ii) establish new exemptions from SEC registration and reporting requirements for certain advisers that are exempt from registration ("exempt reporting advisers"); and (iii) reallocate regulatory responsibility for advisers between the SEC and the states. In addition, the Commission amended rules and Form ADV to expand the disclosure provided by registered investment advisers and to require certain items of Form ADV to be completed and reported by exempt reporting advisers. Also, the Commission revised its pay-to-play rule to allow advisers to pay compensation to solicitors who are registered as broker-dealers, investment advisers or municipal advisors if certain conditions are satisfied.
Legal Alert: CFTC Proposes Temporary Relief from Certain Provisions of the Dodd-Frank Act Slated to Become Effective on July 16, 2011
June 14, 2011
Earlier today, the Commodity Futures Trading Commission (CFTC) issued a proposed order to temporarily exempt swap market participants from certain provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that will become effective on July 16, 2011. The proposed order, which will be open for public comment for 14 days following its publication in the Federal Register, will provide relief from sections of Title VII that become effective on July 16 and either (a) reference the terms "swap," "swap dealer," "major swap participant," or "eligible contract participant," or (b) repeal existing Commodity Exchange Act (CEA) exemptions for certain transactions in exempt or excluded commodities (namely Sections 2(d), 2(e), 2(g), 2(h) and 5d of the CEA).
Legal Alert: The Impact of AT&T Mobility v. Concepcion on Financial Services Companies: Inclusion of Arbitration Clauses in Customer Contracts and the Impact of Dodd-Frank
May 24, 2011
On April 27, 2011, the U.S. Supreme Court held in a 5-4 decision that the Federal Arbitration Act (FAA) preempted California's Discover Bank rule, which deemed unenforceable most mandatory consumer arbitration agreements that include class-action waivers. The decision is seen by many as a victory for companies, especially those that rely on standardized contracts, and paves the way for the use of arbitration clauses as a means of avoiding class litigation. However, questions remain as to how the newly formed Consumer Financial Protection Bureau (CFPB) may attempt to regulate the use of arbitration clauses in consumer contracts and whether this may have the effect of limiting the impact of the Concepcion decision. Given the CFPB's focus on consumer contracts, commercial contracts face less uncertainty, making adoption of arbitration agreements with express class-action waivers worthy of consideration by providers of business services.
Legal Alert: FSOC Proposed Rulemaking on Fed Supervision of Nonbank Financial Companies: Congress Questions Transparency
May 23, 2011
For insurers following the latest developments with respect to the Financial Stability Oversight Council (FSOC) and the designation of nonbank financial companies subject to additional oversight pursuant to Section 113 of The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a House Financial Services Subcommittee hearing provided some interesting insights into the next steps in the process. In particular, the FSOC has drawn increased scrutiny from Congress, including at the recent hearing, and criticism from the insurance industry with respect to transparency in developing the applicable criteria, lack of insurance industry input during the process, and ongoing debate on the appropriate number of companies which should be subject to heightened supervision. The Senate Banking Committee also held a less colorful hearing on the FSOC's systemic risk monitoring on May 12, 2011. We anticipate that the next meeting of the FSOC, possibly scheduled before the end of May, will reflect a response to some of the criticisms from Congress.
Dodd-Frank Crossword Puzzle
May 9, 2011
Dodd-Frank Crossword Answer Key
May 9, 2011
Legal Alert: CFTC Extends Most, But Not All, Proposed Rule Comment Periods; Lawmakers Propose Extension of Title VII's Deadline
May 6, 2011
Earlier this week the Commodity Futures Trading Commission (CFTC) published a notice in the Federal Register to announce the re-opening and extension of the public comment period for certain of its proposed rules to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The reopening/extension provides interested parties the opportunity to comment on the CFTC's proposed regulatory framework for swap transactions now that its "mosaic" of proposed rules is substantially complete. The new public comment deadline for the affected proposed rules is June 3, 2011.
A list of the 32 proposed rulemakings whose public comment periods have been extended or reopened by the CFTC's notice is available here. To the extent a proposed rule's comment period has already closed, such public comment period is now reopened until June 3, 2011. To the extent that a proposed rule's comment period is currently open but is set to close prior to June 3, 2011, the comment period deadline is now extended to June 3. Proposed rules whose comment periods are set to close after June 3, 2011 remain unaffected.
Dodd-Frank Brings Expansion Opportunities - and Obstacles, Annette Tripp, April 29-May 5, 2011
Reprinted with permission from Houston Business Journal
Legal Alert: U.S. Treasury Secretary Proposes to Exempt FX Swaps and FX Forwards from Dodd-Frank's "Swap" Definition
April 29, 2011
Earlier today the U.S. Treasury Secretary issued a Notice of Proposed Determination (the "Notice") to exempt foreign exchange ("FX") swaps and FX forwards from the definition of a "swap" contained in the Commodity Exchange Act ("CEA"), as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act").
Legal Alert: CFTC Proposes Key Rulemakings that Complete the "Mosaic" of Proposed Rules to Implement Title VII of the Dodd-Frank Act
April 28, 2011
The Commodity Futures Trading Commission ("CFTC") held an open meeting yesterday to issue several key proposed rulemakings that, together with the CFTC's other proposed rulemakings to date, complete the so-called "mosaic" of CFTC proposed rules to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Topics addressed by yesterday's proposed rules include definitions for the terms "swap", "security-based swap" and "security-based swap agreement" (collectively the "product definitions") as well as capital requirements for swap dealers and major swap participants, segregation of cleared swaps customer collateral and conforming amendments to existing CFTC regulations. The Securities and Exchange Commission ("SEC") also held an open meeting yesterday to consider the proposed rule on the product definitions, which is a joint proposed rule by the CFTC and the SEC.
Legal Alert: CFTC and SEC Seek Public Input on the Timetable for Effective Dates of Final Rules to Implement Title VII of the Dodd-Frank Act
April 15, 2011
Earlier this week the Commodity Futures Trading Commission (CFTC) announced that it will host, jointly with the Securities and Exchange Commission (SEC), a public roundtable to solicit market participants' views on the effective dates of final rules to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act) and a schedule for compliance with such rules. The CFTC also began accepting public comments on these issues via its Web site. These initiatives aim to ensure that market participants have sufficient time to develop policies, procedures, systems and processes needed to comply with the new regulatory requirements.
Legal Alert: Proposed Margin Requirements for Uncleared Swaps Could Significantly Increase the Costs Associated with Over-the-Counter Swap Transactions and May Apply to Some End-Users
April 13, 2011
Yesterday the Commodity Futures Trading Commission (CFTC) and certain Federal bank regulators issued proposed margin requirements for uncleared swaps, as required by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The margin requirements contained in the proposal issued by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration and the Federal Housing Finance Agency (collectively referred to as the Prudential Regulators) will apply to those entities that are swap dealers, security-based swap dealers, major swap participants or major security-based swap participants under Title VII of the Dodd-Frank Act and that are currently regulated by one of the Prudential Regulators. The CFTC's proposal, on the other hand, will apply to those swap dealers and major swap participants that are not currently regulated by a Prudential Regulator.
Legal Alert: Chairman Gensler Outlines Timeline for Finalizing and Implementing the Commodity Futures Trading Commission's Dodd-Frank Rulemakings
March 18, 2011
In a speech at the recent Futures Industry Association (FIA) conference held in Boca Raton, Florida, earlier this week, Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler laid out his new "best case" plan for proposing the remaining rules to be promulgated by the CFTC under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and then finalizing all of the CFTC's Dodd-Frank rulemakings.
Legal Alert: Comments Sought on Proposed Interpretive Order on Disruptive Practices Due May 17
March 18, 2011
The Commodity Futures Trading Commission's (Commission) Proposed Interpretive Order on Disruptive Practices (Proposed Order) announced during the Commission's February 24, 2011, open meeting was published today in the Federal Register. Parties have until May 17, 2011 to file comments. The Commission contemporaneously issued a Notice of Termination ending the Commission's Advance Notice of Proposed Rulemaking on Antidisruptive Practices Authority.
Legal Alert: U.S. District Court Retroactively Applies Dodd-Frank Whistleblower Restriction to Bar Arbitration Provision in Employment Agreement
March 11, 2011
In Pezza v. Investors Capital Corp., a Massachusetts federal district court held recently that Section 922 of the Dodd-Frank Act, which amends the Sarbanes-Oxley Act (SOX) whistleblower protections to bar enforcement of pre-dispute arbitration agreements in whistleblower challenges, applies retroactively. Accordingly, the Pezza court denied the defendant employer's motion to compel arbitration, invalidating the pre-dispute arbitration agreement that was executed before Dodd-Frank's enactment.
Legal Alert: The Consumer Financial Protection Bureau: Structure, Mission and Limitation of Authority Prior to the Appointment of a Director
March 8, 2011
The Consumer Financial Protection Bureau (CFPB) was created by Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank Act). The short title for Title X is the Consumer Financial Protection Act of 2010. The CFPB is scheduled to assume its powers as an independent bureau within the Federal Reserve System on July 21, 2011 (the Transfer Date).
Legal Alert: FSOC Proposed Rulemaking on Fed Supervision of Nonbank Financial Companies: Critics Submit Comments and Ask Who is Speaking on Behalf of the Insurance Industry
March 7, 2011
Recent notices of proposed rulemaking published by the Financial Stability Oversight Council (FSOC) and the Board of Governors of the Federal Reserve System (Board) to advance the regulatory process of implementing Section 113 of The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) have raised questions among members of Congress, state regulators and the insurance industry. In particular, there is a concern about the development and imposition of new standards that would apply to certain insurers and subject them to Board supervision without sufficient input from the insurance industry and its regulators.
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Roadmaps
As various Title sections are updated, an asterisk(*) next to a Title will note changes in certain Key Provisions and Regulations in the Roadmap. Within each Roadmap Title, the section most recently updated is highlighted in yellow.
*Title I - Key Provisions and Regulatory Rulemakings
Title II - Key Provisions and Regulatory Rulemakings
Title III - Key Provisions and Regulatory Rulemakings
*Title IV - Key Provisions and Regulatory Rulemakings
Title V - Key Provisions and Regulatory Rulemakings
*Title VI - Key Provisions and Regulatory Rulemakings
*Title VII - Key Provisions and Regulatory Rulemakings
Title VIII - Key Provisions and Regulatory Rulemakings
*Title IX - Key Provisions and Regulatory Rulemakings
Title XI - Key Provisions and Regulatory Rulemakings
Title XII - Key Provisions and Regulatory Rulemakings
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