Archives: Dodd Frank Reforms

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2015 CFTC Regulatory Agenda

As 2015 is now underway, we wanted to highlight some of the potential regulatory developments from the CFTC that may arise in the new year. Overall we expect 2015 to be a year of continued CFTC implementation of the Dodd-Frank rules and related "tweaks" to those rules to address the concerns of end-users and market participants.… Continue Reading

Comparing Collateral Segregation Regimes for Uncleared Swap Margin

The proposed margin rules from the CFTC and the prudential regulators, when considered alongside the existing CFTC collateral segregation rules, present the potential for three different collateral segregation regimes applying to initial margin posted to a swap dealer. To compare the differences, we have created a chart of the three collateral segregation regimes.… Continue Reading

Approaching Ambiguities in the Financial Entity Definition

The third installment of our ongoing series on the 2014 CFTC Reauthorization Act covers a potential change to the definition of a "financial entity", which has been a particularly troublesome and confusing definition for end-users, and the banks that enter into swaps with them. In addition, the CFTC may be able to address the confusion through its rule making and interpretations, without the need for a legislative change.… Continue Reading

CFTC Approves Important Rule Amendment for Government-Owned Utilities and Their Swap Counterparties

On September 17, 2014, at the first Open Meeting of the Commodity Futures Trading Commission chaired by Timothy Massad, the CFTC approved an important amendment to its Dodd-Frank Act rules for government-owned electric and natural gas utilities and their swap counterparties. The rule amendment provides a permanent regulatory fix to a serious problem for utility special entities arising out of the CFTC rules published in 2012 defining which entities must register with the CFTC as "swap dealers."… Continue Reading

The 2014 CFTC Reauthorization Act: An Ongoing Series

In late June, the U.S. House of Representatives passed a bill to reauthorize the CFTC, HR 4413, which includes a number of revisions to the Dodd-Frank Act and CFTC regulations. Most of these proposed changes are an attempt to limit some of the added regulatory burden for various swap end-users. We are beginning a series of posts that will further analyze the 2014 CFTC Reauthorization Act.… Continue Reading

CFTC Extends Comment Period to August 4th for Aggregation and Position Limits Proposals

By Crystal Travanti and Tom Watterson In the ongoing saga of the CFTC Position Limit Rules, the CFTC extended the comment periods for the Proposed Aggregation Rules and the Proposed Position Limits Rules until August 4, 2014. The Proposed Position Limits Rules establish speculative position limits for 28 exempt and agricultural commodity futures and options contracts and the physical commodity swaps that are … Continue Reading

Potential New Clearing Determinations Under Consideration by the CFTC

By Andrew Cross and Tom Watterson The CFTC is currently reviewing clearing determinations for two new classes of swaps. The CFTC is currently reviewing what would be the first clearing determination for non-deliverable FX forwards (NDFs). The clearing determination would cover NDFs in USD with the following currencies: Brazilian real (BRL) Russian ruble (RUB) Indian … Continue Reading

Upcoming CFTC Roundtables: CPO Risk Management and End Users

By Andrew Cross and Tom Watterson We want to let everyone know about two upcoming CFTC Roundtables, the dates and topics are below. March 18th– Risk management procedures for CPOs, including managing investment risk, operational risk, and compliance or regulatory risk. April 3rd– Dodd-Frank issues for end-users of swaps, including recordkeeping under CFTC Rule 1.35, forward … Continue Reading

CFTC Grants Time-Limited Relief from SEF Trading Mandate for “Package Transactions”

On February 10th, the CFTC granted time-limited no-action relief for so-called "Package Transactions".  The relief expires at 11:59 p.m. (eastern time) on May 15, 2014. QUESTION:  What is a Package Transaction? ANSWER:   A Package Transaction is a transaction involving two or more instruments: (1) that is executed between two counterparties; (2) that is priced or quoted … Continue Reading

Breaking: CFTC Certifies the First MAT Submission

By Andrew Cross and Tom Watterson Attention investment managers, banks, CPOs, insurance companies and anyone who currently must clear their interest rate swaps, the requirement to trade interest rate swaps on a swap execution facility ("SEF") will come into force on February 15, 2014. Part 1: What will be covered by the trading mandate? The … Continue Reading

BREAKING…Municipal Advisor FAQ

On January 10th, the SEC released a 19 page FAQ (available here) on the new municipal advisor rule.  We focus your attention to the last sentence of the answer to Question 4.1 Therefore, the Staff would not object if those SEC registered investment advisers that provide advice on municipal derivatives in an investment portfolio for … Continue Reading

CFTC Provides Time Limited Relief to Oral Recordkeeping Requirements for CTAs — UPDATE to: One Consequence of Becoming a SEF Member – Increased Recordkeeping Requirements

By Andrew Cross and Tom Watterson In our November 1, post “One Consequence of Becoming a SEF Member – Increased Recordkeeping Requirements” we sought to raise awareness regarding increased recordkeeping requirements for SEF members under CFTC Rule 1.35(a). CFTC Rule 1.35(a) generally requires “members” of a SEF (or an exchange) to maintain oral records (i.e., … Continue Reading

CFTC Volcker Rule Meeting To Be Held 12_10_2013 at

The CFTC will hold a meeting on 12_10_2013 at 9:30 a.m. to discuss its version of the Volcker Rule, as well as other commission business.  One other topic on the list…block trading of futures contracts.    The press release, inclusive of meeting information, is available here. Good day.  Good developments. TSR… Continue Reading

Attention Registered Investment Advisers – Pay Attention to the New Municipal Advisor Registration Rules

On November 12, 2013, the Securities and Exchange Commission published its final municipal advisor registration rule.  Information about this rule is available here. Investment advisers that provide advice to municipalities should pay particular attention to this rule, especially if a particular investment mandate may involve swaps or security based swaps.  These particular types of derivatives … Continue Reading

One Consequence of Becoming a SEF Member – Increased Recordkeeping Requirements

We wanted to raise awareness on a point that has not received much attention to date: increased recordkeeping requirements for SEF members. At the outset, many SEFs use the term “participant” synonymously with “member.” So, if you are one of the many swap market participants who have received a “Participant Agreement” in the past month, then this … Continue Reading

CFTC Taking Comments on Requiring Interest Rate Swaps to be Executed on SEFs or DCMs

By Andrew Cross and Tom Watterson On Friday, Javelin SEF made the first “Made Available to Trade” submission (an “MAT Submission”) to the CFTC for certain interest rate swaps. Javelin’s submission, if not objected to by the CFTC, would cause those interest rate swaps come under the trading requirement, and those swaps would then be … Continue Reading

6 Months Later, Lenders Continue to Address ECP Issues

Thanks to author Abbey Mansfield, who originally posted the piece at The Lending Law Report on October 10th.  In the posting, Abbey discusses ECP qualification and market trends from the perspective of a lending lawyer.  The full posting is available here. Good day.  Good posting – thanks Abbey. TSR  … Continue Reading

The Debt Ceiling Debate: It’s not Just for CDS Anymore

By Andrew Cross and Tom Watterson Last week ISDA announced that, in the event of a default by the U.S. on its debt following the failure to raise the debt ceiling, the sellers of CDS on U.S. debt would pay-out, at most, only $3.6 billion. The potential default, however, is also impacting the interest rate swap … Continue Reading