Swaps and Derivatives

This Note details proposed CFTC interpretive guidance on the extraterritorial application of the swaps provisions of Title VII of the Dodd-Frank Act, as well as the corollary SEC proposal for treatment of non-US security-based swaps (SBS) including their application to non-US affiliates of US persons and to US affiliates of non-US persons.

EMIR (the Regulation on OTC derivatives, central counterparties and trade repositories) (Regulation 648/2012) requires certain classes of over-the-counter (OTC) derivatives contracts to be cleared through a central counterparty (CCP). The requirement will have a significant impact on a large number of counterparties that engage in derivatives trading, including both regulated and unregulated entities. This note considers the scope and implications of the EMIR clearing requirements. For an overview of EMIR and timing of its implementation see Practice note, Hot topics: EMIR.

This Note discusses important final joint CFTC and SEC rulemaking under the Dodd-Frank Act establishing definitions of key Title VII terms "swap dealer," "security-based swap dealer," "major swap participant" (MSP) and "major security-based swap participant" (referred to collectively as "registered entities"). These rules establish thresholds that require certain parties to register as registered entities. Registered entities are subject to enhanced regulatory oversight under the Dodd-Frank Act because they engage in significant levels of derivatives activity.

This Practice Note addresses final Dodd-Frank external business conduct (EBC) rules (also referred to as external business conduct standards or EBCS) for swap dealers (SDs) and major swap participants (MSPs) and highlights safe harbors where swap documentation can be used to facilitate compliance.

This Chart provides a summary of the jurisdictions that have initialed or signed a model intergovernmental agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA)

A Q&A guide to Insurance and Reinsurance in Finland. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Finland. To compare answers across multiple jurisdictions visit the Insurance and reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

An article about the taxation of derivatives under FATCA. This article is part of a regular series of articles on US tax issues for UK advisers contributed by Allen & Overy LLP.

This table is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg. The contents of this table derive from Question 25 of the jurisdictional Q&As.

This Article provides an overview of the Foreign Account Tax Compliance Act's (FATCA's) impact on foreign funds and other foreign investment entities, in light of proposed regulations released in February 2012 by the IRS and Treasury Department.

This tool enables subscribers to search the Country Q&A in the Insurance and Reinsurance multi jurisdictional guide by question and jurisdiction. Simply select the questions and the jurisdictions that you are interested in and click the "submit" button.

A consideration of the impact of the EU financial reforms on the OTC derivative and commodities market and a comparison with the US Dodd-Frank Act proposals for reform in this area.

This Article discusses the Foreign Account Tax Compliance Act (FATCA) provisions included in the Hiring Incentives to Restore Employment (HIRE) Act to target offshore tax evasion.

In May 2013, ISDA published a reporting protocol and a conduct allocation protocol, as well as safe harbor letters under the Dodd-Frank documentation initiative. It also issued an announcement relating to the actions of its Americas Credit Derivatives Determinations Committee.

The International Swaps and Derivatives Association (ISDA) has released draft arbitration clauses to its members for consultation.

On 26 March 2013, the International Swaps and Derivatives Association (ISDA) published a guidance note and amendment letter in relation to the discontinuation of certain currencies and maturities of LIBOR.

In February 2013, ISDA issued two announcements relating to the actions of its EMEA Credit Derivatives Determinations Committee.

PRIME Finance has published draft model arbitration clauses for use with the ISDA Master Agreement.

In December 2012, ISDA published a Settlement Matrix for Early Termination for Cross-Currency Swaps and issued an announcement relating to the actions of its Americas Credit Derivatives Determinations Committee.

In October 2012, ISDA published an equity derivatives supplement to IndxVarSwp-1 ED Transaction Type (Single/Multi-Exchange Index - OM - All Parties).

In September 2012, ISDA published documents for currency swaps and equity derivatives, as well as a supplement to the 2006 ISDA definitions.

In August 2012, ISDA published protocols on the Dodd-Frank Act and the Foreign Account Tax Compliance Act as well as documents relating to Indian onshore derivative transactions and cleared swaps.

On August 13, 2012, final rules on the definitions of the terms "swap" and "security-based swap" were published in the Federal Register triggering many swap-related and certain other requirements under Title VII of the Dodd-Frank Act.

In July 2012, ISDA published a supplement to the 2006 ISDA definitions and an illegality/force majeure protocol.

ISDA has published an Illegality/Force Majeure Protocol which can be used to amend the 1992 ISDA Master Agreement.

The CFTC has issued proposed interpretive guidance on the extraterritorial application of the swaps provisions of Title VII of the Dodd-Frank Act.

In June 2012, ISDA published standard documents relating to commodity and inflation derivatives, a memorandum on the processing of Unitymedia GmbH transactions and a protocol on collateral settlement timing.

In May 2012, ISDA published documents for interest rate and currency derivatives, FX and currency option transactions, commodity derivatives and credit derivatives. It also issued three announcements relating to the actions of its determinations committees.

The CFTC and the SEC issued joint final rules defining the terms "swap dealer," "major swap participant," "security-based swap dealer" and "major security-based swap participant" for purposes of the Dodd-Frank Act, the Commodity Exchange Act (CEA) and the US securities laws. The rules also modify the definition of "eligible contract participant" under the CEA to include swap dealers (SDs), major swap participants (MSPs), security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs).

The European Parliament has published a press release announcing it has adopted the European Market Infrastructure Regulation (EMIR) (also known as the Regulation on over-the-counter (OTC) derivative transactions, central counterparties (CCPs) and trade repositories). (Free access.)

In February 2012, ISDA published standard documents for credit derivatives, interest rate and currency derivatives, and FX and currency option transactions. It also issued two announcements relating to the actions of its determinations committees.

The European Parliament, Council of the European Union and European Commission have reached agreement on the proposed European Market Infrastructure Regulation (EMIR).

In January 2012, ISDA published Supplement number 29 to the 2006 ISDA Definitions, as well as an announcement by its Americas Credit Derivatives Determinations Committee.

In November 2011, ISDA published proposed language to address the effects of the US Foreign Account Tax Compliance Act (FATCA) withholding tax on derivatives transactions.

The European Parliament has passed a legislative resolution adopting, with amendments, the European Commission's proposal for a regulation on short selling and certain aspects of credit default swaps. (Free access.)

During October 2011, ISDA published standard documents for deliverable CNY (Chinese Yuan Renminbi, the currency of China) FX transactions, currency option transactions and swap transactions where a CNY Disruption Event renders CNY non-deliverable.

The European Commission presented a proposal for a Directive on a common system of financial transaction tax and amending Directive 2008/7/EC concerning indirect taxes on the raising of capital on 28 September 2011. The update now includes comments from Martin Walker of Deloitte LLP.

In August 2011, ISDA published an amendment to Annex A to the 1998 Foreign Exchange and Currency Option Definitions. It also published an announcement by its EMEA Credit Derivatives Determinations Committee.

An update on the IRS's revision of Notice 2011-53 to include withholdable payments to non-financial foreign entites in the phased implementation schedule for withholding under the Foreign Account Tax Compliance Act (FATCA) enacted as part of the Hiring Incentives to Restore Employment Act of 2010.

An update on the IRS's issuance of guidance providing for the phased implementation of withholding and certain reporting provisions of the Foreign Account Tax Compliance Act (FATCA) enacted as part of the Hiring Incentives to Restore Employment Act of 2010.

In June 2011, ISDA published documents relating to cleared swaps, cross currency FX transactions and interest rate and currency derivatives. It also published an announcement by its EMEA Credit Derivatives Determinations Committee.

During May 2011, ISDA published an amendment to Annex A to the 1998 Foreign Exchange and Currency Option Definitions.

On 29 April 2011, the European Commission announced that it has opened two separate investigations into suspected breaches of Article 101 and/or Article 102 of the TFEU in the Credit Default Swaps market.

ISDA has published a Master FX Novation and Cancellation Protocol which can be used to amend (among other documents) the 1992 and 2002 ISDA Master Agreements.

ISDA published standard documents in February 2011 relating to credit derivatives and equity derivatives.

An update on new S&P criteria for assessing swap counterparty and other support in structured finance transactions.

ISDA published various standard documents of general application in November 2010.

An update on the CFTC's proposed new rules under the Dodd-Frank Act creating a procedural framework for swap dealers and major swap participants to register with the CFTC and to establish a registration requirement that applies to foreign boards of trade.

An update on a speech by CFTC Chairman Gary Gensler indicating that swap regulations implemented under Dodd-Frank will apply to foreign banks doing business in the US.

On 15 September 2010, the European Commission published a legislative proposal on over-the-counter derivatives, central counterparties and trade repositories.

An update on standard documents of general application published by ISDA in July 2010.

A Q&A guide to insurance and reinsurance law in Germany. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Germany. To compare answers across multiple jurisdictions visit the Insurance and reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance in the United States. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the regulation of insurance and reinsurance contracts; the corporate structure of insurers and reinsurers; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities, including authorisation/licensing requirements; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in the United States. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in Brazil. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Brazil. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in China. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in China. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in Ireland. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Ireland. To compare answers across multiple jurisdictions visit the Insurance and reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in Mexico. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Mexico. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in South Korea. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in South Korea. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in Australia. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Australia. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance in Belgium. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the regulation of insurance and reinsurance contracts; the corporate structure of insurers and reinsurers; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities, including authorisation/licensing requirements; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Belgium. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in India. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in India. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance in South Africa. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the regulation of insurance and reinsurance contracts; the corporate structure of insurers and reinsurers; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities, including authorisation/licensing requirements; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in South Africa. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This article is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of contents visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance in the British Virgin Islands. The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the regulation of insurance and reinsurance contracts; the corporate structure of insurers and reinsurers; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities, including authorisation/licensing requirements; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in the British Virgin Islands. This article is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of contents visit www.practicallaw.com/insurance-mjg.

A Q&A guide to insurance and reinsurance law in the United Arab Emirates, including the Dubai International Financial Centre (DIFC). The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in the United Arab Emirates, including the DIFC. To compare answers across multiple jurisdictions visit the Insurance and Reinsurance Country Q&A tool. This Q&A is part of the PLC multi-jurisdictional guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-mjg.

In Lehman Brothers International (Europe) v Lehman Brothers Finance SA [2012] EWHC 1072 (Ch) (27 April 2012), the High Court gave guidance on how to construe the close out provisions of the 2002 ISDA Master Agreement.

In Pioneer Freight Futures Company Ltd v TMT Asia Ltd [2011] EWHC 1888 (Comm), the High Court has held that payment obligations that are suspended under section 2(a)(iii) of the 1992 ISDA Master Agreement should be taken into account for netting purposes under section 2(c).

An issuing bank is free to set-off a beneficiary's debts against payment under letter of credit, even where the beneficiary owes those amounts under a completely unrelated transaction. Lehman Brothers Commodity Services Inc. v Credit Agricole Corporate and Investment Bank [2011] EWHC 1390 (Comm).

In Britannia Bulk plc v Pioneer Navigation Ltd and others [2011] EWHC 692 (Comm), the High Court considered the combined effect of the Automatic Early Termination, Loss and Second Method provisions under a 1992 ISDA Master Agreement and concluded that a non-defaulting party cannot rely on section 2(a)(iii) of that agreement to formulate a "nil loss" argument against a defaulting party's claim for payment of close-out amounts. NOTE: this case was upheld by the Court of Appeal on 3 April 2012, see Legal update, Section 2(a)(iii) ISDA Master Agreement: Court of Appeal judgment on four appeals.

In Lomas and others (together the Joint Administrators of Lehman Brothers International (Europe) (in administration)) v JFB Firth Rixson, Inc and others and ISDA as intervenor [2010] EWHC 3372 (Ch), the High Court considered the effect of section 2(a)(iii) of the ISDA Master Agreement on the obligations of parties to a swap agreement, following an event of default. NOTE: this case was upheld by the Court of Appeal on 3 April 2012, see Legal update, Section 2(a)(iii) ISDA Master Agreement: Court of Appeal judgment on four appeals.