Enter to open, tab to navigate, enter to select
Where Are We? Practical Law Finance Introduces Road Map to Dodd-Frank Swaps and Derivatives Regulation
Practical Law Legal Update 6-558-2066 (Approx. 4 pages)
Where Are We? Practical Law Finance Introduces Road Map to Dodd-Frank Swaps and Derivatives Regulation
by Practical Law Finance
| Published on 20 Feb 2014 • USA (National/Federal) |
As derivatives regulators pause and the market catches its breath, Practical Law Finance introduces a new navigation tool designed to help you focus on the regulations that affect your clients and your business so that you see only currently applicable rules and releases and can avoid wasting time wading through superseded proposals and expired relief.
As federal swaps and derivatives regulators take their first breather in more than three-and-a-half years since the enactment of the Dodd-Frank Act in 2010, it is a time for reflection. Where are we in swaps and derivatives regulation and how did we get here? Many market participants might answer the latter part of that question with one word: "Painfully." However, many commentators have also noted more optimistically that much of the "heavy lifting" in the implementation of a comprehensive derivatives regulatory framework in the US has been completed.
It is estimated that the CFTC is responsible for regulating approximately 95% of the derivatives markets, while the SEC is responsible for security-based swaps, which make up the remainder. As a result, many of the regulatory pillars of the Dodd-Frank era have already been constructed and the fundamental nature of the swaps and derivatives business and legal practice permanently altered, though a few key areas still need to be addressed. To summarize briefly:
- Exchange trading. Many standardized interest rate swaps and CDS are just beginning to be traded on exchanges or SEFs this month under Title VII's exchange-trading mandate. For a table showing currently applicable Dodd-Frank regulatory activity on swap exchange trading, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Swap Exchange Trading.
- Clearing. Many standardized interest rate swaps and CDS are being cleared under Title VII's clearing mandate. For a table showing currently applicable Dodd-Frank regulatory activity on swap clearing, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Swap Clearing.
- Data reporting. All major swap data reporting rules are final and effective, though regulators have had trouble figuring out what to do with all the data. For a table showing currently applicable Dodd-Frank regulatory activity on swap data reporting, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Swap Data Reporting.
- SDs and MSPs. Swap dealers (SDs) and major swap participants (MSPs) have been identified, have registered with the CFTC and are doing their best to adhere to a comprehensive framework of applicable business conduct standards under Title VII rulemaking. For a table showing currently applicable Dodd-Frank regulatory activity on rules applicable to SDs and MSPs, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Swap Dealers (SDs) and Major Swap Participants (MSPs).
- Margin collateral. Many final margin collateral segregation rules are in effect, though major rules on margin collateral collection for uncleared swaps have yet to be finalized (expected to be the next, and one of the final, major hurdles for regulators). For a table showing currently applicable Dodd-Frank regulatory activity on swaps and derivatives margin collateral matters, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Swap and Derivatives Margin Collateral Matters and FCM Rules.
- Volcker and Pushout rules. Conformance with the Volcker Rule and the swaps Pushout Rule by market participants is under way. For a table showing currently applicable Dodd-Frank regulatory activity on the Pushout Rule, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: The Swaps Pushout Rule. For details on rulemaking and other regulatory activity on the Volcker Rule, see Road Map to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: The Volcker Rule.
- Position limits. The CFTC hit a stumbling block as its final position limits rules were invalidated by a federal court and had to be re-proposed. For a table showing currently applicable Dodd-Frank regulatory and other activity on speculative commodity position limits, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: Speculative Commodity Position Limits.
- Cross-border. While a framework for cross-border application of Dodd-Frank swaps and derivatives rules to non-US persons has been introduced by both the CFTC and the SEC, with the CFTC further along, there still appears to be much to do among global regulators to coordinate and align swaps and derivatives regulation across jurisdictions. For a table showing currently applicable regulatory activity on the cross-border (or extraterritorial) application of Dodd-Frank swaps rules, see Road Map to Dodd-Frank Swaps and Derivatives Regulation: The Dodd-Frank Act: Cross-border Application of Swaps Rules.
Practical Law Finance has been there every step of the way, providing the most expansive coverage available of the mind-boggling volume of regulatory activity in these areas (and more). With all of the rules, interim final rules, guidance, advisories, no-action relief, proposals and other releases, it can be a challenge to figure out which rules and relief apply. The Road Map to Dodd-Frank Swaps and Derivatives Regulation is a navigation tool that organizes and distills our comprehensive library of Dodd-Frank swaps and derivatives resources into tables that clearly present only currently applicable final rules, guidance and relief, as well as important outstanding proposals, so you can drill down into the rules that affect your clients and business without wasting time wading through superseded proposals and expired relief. All of the Practical Law resources provided include primary-source links.