Amendments to Effective Date for Swap Regulation
Co-authored by Christopher H. Mendoza and Christian B. Hennion.
On December 19, 2011, the Commodity Futures Trading Commission issued a final order that extends the CFTC’s prior grant of temporary relief from certain swap-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that would otherwise have taken effect on July 16, 2011 (the Order). Specifically, the Order provides relief with respect to (1) self-effectuating provisions of the Dodd-Frank Act that reference terms requiring further definition, and (2) self-effectuating provisions of the Dodd-Frank Act that repealed existing statutory safe harbors for over-the-counter derivatives transactions. The latest “sunset” date for the Order is July 16, 2012.
In response to comments received on the draft order proposed in October 2011, the CFTC has clarified that the Order does not expand the scope of transactions eligible to be transacted on an exempt commercial market (ECM) or electronic board of trade (EBOT) to include transactions in agricultural commodities. In addition, the Order provides that the relief granted thereby will not expire prior to July 16, 2012 with respect to transactions that are (i) executed on an ECM or EBOT that is operating under, and in full compliance with the conditions of, the ECM/EBOT “Grandfather Order” previously issued by the CFTC in September 2010, and (ii) cleared by a registered derivatives clearing organization.
The CFTC’s press release regarding the Order, which includes links to the Order and an accompanying staff no-action letter, is available here.
