CFTC Issues Guidebook for Part 20 Reports
On Wednesday, December 7, 2011, the Commodity Futures Trading
Commission ("CFTC") issued a Guidebook for Part 20
Reports providing additional guidance and detailed instructions for
submitting large swaps trader reports to the Commission.
On July 22, 2011, the CFTC published Part 20 of the CFTC's
Regulations requiring large trader reports for physical commodity
swaps. Clearing organizations and clearing members were required to
begin reporting on cleared swaps on November 21, 2011, and must
begin reporting on uncleared swaps on January 20, 2012. In
addition, the fully compliant month-end open interest reports are
required to be collected beginning in September 2011 through
February 2012 and submitted to the CFTC by March 20, 2012.
Read the CFTC press release
The Federal Bank Regulatory Agencies Amend Previously Proposed Rules
On Wednesday, December 7, 2011, the Federal Reserve Board (the
"Fed"), the Office of the Comptroller of the Currency
(the "OCC"), and the Federal Deposit Insurance Company
(the "FDIC") announced they are seeking comment on a
notice of proposed rulemaking that would amend an earlier proposal.
The initial proposal made modifications to the agencies' market
risk capital rules for banking organizations with significant
trading activities.
The earlier proposal was based largely on the revisions to the
market risk framework published by the Basel Committee on Banking
Supervision, but did not include aspects of the Basel Committee
revisions that rely on credit ratings. Under Section 939A of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the
"Dodd Frank Act"), all federal agencies must remove
references to, and requirements of, reliance on credit ratings from
their regulations and replace them with appropriate alternatives
for evaluating creditworthiness.
The amended proposal includes alternative standards of
creditworthiness to be used in place of credit ratings to determine
the capital requirements for certain debt and securitization
positions covered by the market risk capital rules. The proposed
creditworthiness standards include the use of country risk
classifications published by the Organization for Economic
Cooperation and Development for sovereign positions,
company-specific financial information and stock market volatility
for corporate debt positions, and a supervisory formula for
securitization positions.
Read the Fed press release
Read the OCC press release
The SEC and CFTC Meet with Other International OTC Regulators
On Friday, December 9, 2011, the Securities and Exchange
Commission (the "SEC") released a statement announcing
that the chairmen of the SEC and CFTC had met with other
international regulators of over-the-counter ("OTC")
derivatives markets in Canada, the European Union, Hong Kong,
Japan, and Singapore. Since mid-2011, these regulators have engaged
in a series of bilateral technical dialogues on OTC derivatives
regulation. This meeting was the first time that the regulators met
as a group to discuss implementation efforts. In the meeting, the
regulators addressed the cross-border issues related to the
implementation of new legislation and rules governing the OTC
derivatives markets in their respective jurisdictions. At the
conclusion of the meeting, the authorities agreed to continue a
multi-lateral regulatory dialogue and to meet as a group again in
early 2012.
Read the SEC press release
CFTC Issues Guidebook for Part 20 Reports
On Wednesday, December 14, 2011, the CFTC proposed regulations
that would establish the process for a designated contract market
or swap execution facility to make a swap "available to
trade" as set forth in the new Section 2(h)(8) of the
Commodity Exchange Act (the "CEA") as added by Section
723 of the Dodd-Frank Act.
Section 723(a)(3) of the Dodd-Frank Act amended the CEA to add a
clearing requirement. This clearing requirement, under new Section
2(h)(1)(A) of the CEA, provides that "[i]t shall be unlawful
for any person to engage in a swap unless that person submits such
swap for clearing to a derivatives clearing organization that is
registered under this Act or a derivatives clearing organization
that is exempt from registration under this Act if the swap is
required to be cleared."
Read the CFTC proposed rule
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