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."
© 2011 Perkins Coie LLP