September 9, 2013 is the date that non-financial commercial end users of derivatives (so-called "Category 3 Entities") must begin clearing most of their interest rate swaps and credit default swaps (CDS) under final Dodd-Frank CFTC rules (see US Derivatives Regulation: Compliance Calendar and Legal Update, Final Clearing Determination for CDS and Interest Rate Swaps Issued by CFTC).

However, it is anticipated that many Category 3 Entities that use derivatives for commercial hedging purposes will opt out of this requirement, as permitted under Title VII (see Practice Note, US Derivatives Regulation: The Commercial End-User Exception to the Mandatory Swap Clearing Requirement). Category 3 Entities include many major businesses and most public companies.

As a result, many businesses and public companies are currently faced with the task of determining whether or not they qualify for the exception, and once that determination has been made, ensuring that they take all relevant steps to comply with the final Title VII commercial end-user exception by September 9. This includes reporting the entity's election to take advantage of the commercial end user exception to a swap data repository.

In connection with this, Practical Law Finance is pleased to feature US Derivatives Regulation Commercial End-User Exception Corporate Governance Checklist, designed to assist businesses, public companies in particular, in fulfilling the corporate-governance requirements necessary to conform to the final commercial end-user rules.

Note that mandatory clearing under Title VII for these same interest rate swaps and CDS, when entered into between two Category 1 Entities (swap dealers, major swap participants and active funds (at least 200 trades per month), began on March 11, 2013. Clearing for these swaps when entered into between a Category 1 Entity and a Category 2 Entity (hedge funds, non-active funds, commodity pools and certain other financial counterparties) or between two Category 2 Entities began on June 10, 2013.

For details on mandatory swap clearing under Title VII of the Dodd-Frank Act, see Summary of the Dodd-Frank Act: Swaps and Derivatives: Swap Clearing and Exchange Trading under Title VII.